Pass-through of commodity price shocks in distribution channels with risk-averse agents

Abstract Rebel organizations often benefit from the sale of primary commodities. However, producing these commodities may require labor from noncombatants. Rebels provide security and payment to civilian suppliers, but their ability to do so depends on consistent profits. How, then, do price shocks to labor-intensive primary commodities undermine rebel–supplier relationships? I hypothesize that negative commodity price shocks lead cash-strapped rebels to ensure suppliers’ loyalty by substituting coercion for positive incentives. Conversely, states seek to limit rapid increases in rebels’ profit while avoiding the reputational costs of civilian victimization. Thus, victimization of rebel suppliers from groups such as pro-government paramilitaries is hypothesized to increase after positive commodity price shocks. I test these hypotheses with a new dataset covering 1999–2007 that combines monthly US STRIDE (System to Retrieve Information from Drug Evidence) data on cocaine price with municipal-level data from the Colombian Centro Nacional de Memoria Histórica about the FARC (Fuerzas Armadas Revolucionarias de Colombia) and paramilitary groups’ use of civilian victimization.

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Do commodity price shocks impact central bank governors' removals? Evidence from Africa

International Journal of Finance & Economics ◽

10.1002/ijfe.2224 ◽

2020 ◽

Author(s):

Christine O. Strong

Keyword(s):

Central Bank ◽

Commodity Price ◽

Price Shocks ◽

Commodity Price Shocks

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Breaks, trends and unit roots in commodity prices: a robust investigation

Studies in Nonlinear Dynamics & Econometrics ◽

10.1515/snde-2013-0022 ◽

2014 ◽

Vol 18 (1) ◽

Cited By ~ 5

Author(s):

Atanu Ghoshray ◽

Mohitosh Kejriwal ◽

Mark Wohar

Keyword(s):

Unit Root ◽

Structural Breaks ◽

Commodity Prices ◽

Unit Roots ◽

Commodity Price ◽

Policy Implications ◽

Price Shocks ◽

Price Series ◽

Commodity Price Shocks ◽

Trend Breaks

AbstractThis paper empirically examines the time series behavior of primary commodity prices relative to manufactures with reference to the nature of their underlying trends and the persistence of shocks driving the price processes. The direction and magnitude of the trends are assessed employing a set of econometric techniques that is robust to the nature of persistence in the commodity price shocks, thereby obviating the need for unit root pretesting. Specifically, the methods allow consistent estimation of the number and location of structural breaks in the trend function as well as facilitate the distinction between trend breaks and pure level shifts. Further, a new set of powerful unit root tests is applied to determine whether the underlying commodity price series can be characterized as difference or trend stationary processes. These tests treat breaks under the unit root null and the trend stationary alternative in a symmetric fashion thereby alleviating the procedures from spurious rejection problems and low power issues that plague most existing procedures. Relative to the extant literature, we find more evidence in favor of trend stationarity suggesting that real commodity price shocks are primarily of a transitory nature. We conclude with a discussion of the policy implications of our results.

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