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Transmission of International Commodity Prices to Domestic Prices in Bangladesh

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  • M. Golam Mortaza

Abstract

In recent years, Bangladesh has experienced persistent price increases, especially of food items, in the domestic market in the backdrop of global increase in food prices. Such price developments in the international commodity markets have brought into forefront the effects of external price changes on domestic inflation, especially in the developing countries. This raises the issue of the existence and extent of import price pass-through to domestic prices. This paper analyzes the relationship between import and domestic prices in Bangladesh during 2000-2008. Using monthly data, the paper explores the relationship between domestic supply and passthrough elasticity and argues that commodities with higher share of domestic supply face a lower pass-through elasticity of import prices on domestic prices.[Bangladesh Bank WP NO 0807]

Suggested Citation

  • M. Golam Mortaza, 2009. "Transmission of International Commodity Prices to Domestic Prices in Bangladesh," Working Papers id:2083, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:2083
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    References listed on IDEAS

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    3. Dawe, David, 2008. "Have recent increases in international cereal prices been transmitted to domestic economies? The experience in seven large Asian countries," ESA Working Papers 37087, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
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    6. David Dawe, 2008. "Have Recent Increases in International Cereal Prices Been Transmitted to Domestic Economies? The experience in seven large Asian countries," Working Papers 08-03, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    7. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
    8. Tim Hampton, 2001. "How much do import price shocks matter for consumer prices?," Reserve Bank of New Zealand Discussion Paper Series DP2001/06, Reserve Bank of New Zealand.
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    Keywords

    International Prices; Domestic Prices; Elasticity; Bangladesh;
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