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International Transmission of Food Prices and Volatilities: A Panel Analysis

Author

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  • Lee , Hyun-Hoon

    (Kangwon National University)

  • Park, Cyn-Young

    (Asian Development Bank)

Abstract

High and volatile food prices pose a significant policy challenge around the world, and an understanding of the dynamics of food price inflation and volatility is essential in designing appropriate policy responses. Using the panel data for 72 countries from 2000 to 2011, the paper assesses the international transmission of food price inflation and volatilities as well as the effects of various internal and external factors on domestic food price inflation and volatility. The paper offers evidence in support of the international transmission of food price inflation and volatility. Specifically, the paper finds that the domestic food price inflation in Asia is strongly associated with the lagged value of global food price inflation (using the FAO food price index), while volatility spillovers from global to domestic food prices are rather contemporaneous. The paper also finds that both national food price inflation rates and volatilities are strongly associated with both intra- and extra- regional food price inflation rates and volatilities, respectively. The findings also suggest that higher economic growth rates, greater shares of food in merchandise imports, and smaller increases in the share of food in merchandise imports lead to lower domestic food price inflation. An appreciation of local currency, greater political stability, and higher income level are also found to lower domestic food price inflation. On the other hand, higher economic growth rates lead to lower volatilities of food prices.

Suggested Citation

  • Lee , Hyun-Hoon & Park, Cyn-Young, 2013. "International Transmission of Food Prices and Volatilities: A Panel Analysis," ADB Economics Working Paper Series 373, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0373
    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-373.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Matthias Kalkuhl & Lukas Kornher & Matthias Kalkuhl & Irfan Mujahid, 2015. "Food price volatility in developing countries – the role of trade and storage," EcoMod2015 8415, EcoMod.
    3. Lanie Tomgouani, 2018. "Working Paper 306 - Asymmetric Price Transmission of Rice in Togo," Working Paper Series 2427, African Development Bank.
    4. Shittu, Adebayo & Akerele, Dare & Haile, Mekbib & Edewor, Sarah, 2017. "How Do Trade and Domestic Policy Variables Stand among Influencers of Grain Price Volatility in Nigeria?," Conference papers 332826, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Asharani Samal & Mallesh Ummalla & Phanindra Goyari, 2022. "The impact of macroeconomic factors on food price inflation: an evidence from India," Future Business Journal, Springer, vol. 8(1), pages 1-14, December.
    6. Kornher, Lukas & Kalkuhl, Matthias, 2013. "Food Price Volatility in Developing Countries and its Determinants," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(4), pages 1-32, November.
    7. Christian Elleby, 2014. "Poverty and Price Transmission," IFRO Working Paper 2015/01, University of Copenhagen, Department of Food and Resource Economics.
    8. Ginn, William & Pourroy, Marc, 2020. "Should a central bank react to food inflation? Evidence from an estimated model for Chile," Economic Modelling, Elsevier, vol. 90(C), pages 221-234.
    9. Mora Barrenechea, Mauricio, 2020. "Time-varying effects of commodities prices in the Bolivian economy," MPRA Paper 104706, University Library of Munich, Germany.
    10. P. Anusha & T. Pirasayiny & S. Sivarajasingham, 2022. "The Impact of World Food Price on Domestic Inflation: Evidence from Sri Lanka," Business and Economic Research, Macrothink Institute, vol. 12(2), pages 168-189, December.
    11. Кожамкулов Канат // Kozhamkulov Kanat & Дәулетханұлы Елдос // Dauletkhanuly Yeldos & Агамбаева Саида // Agambayeva Saida, 2023. "Влияние мировых и внешнеторговых цен на продовольственные товары на внутреннюю инфляцию Казахстана. // The impact of world and foreign trade prices for food products on domestic inflation in Kazakhsta," Working Papers #2023-8, National Bank of Kazakhstan.

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    More about this item

    Keywords

    Food price inflation; food price volatility; food price transmission; food security; food policy;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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