On the Nonlinear Impact of Oil Price Shocks on the World Food Prices Under Different Markets Conditions

In this paper a statistical analysis of trends in energy use in six major OECD countries in the period 1968 to 1988 is reported. The traditional analyses are challenged, and it is concluded that one model, explaining the development of energy ratios in terms of the price of oil and a time trend, applies to all six countries. In each case there is a strong and steady downward trend of around 2% per annum and a price elasticity of less than 5%. It is argued that those accounts of energy use which attribute improvements in energy efficiency mainly to the oil price shocks of 1973 and 1979 are misspecified and wrong. It is suggested that the direct effect of the oil price on energy use is relatively small. This in turn implies that the use of general taxes such as a carbon tax is unlikely to be effective in reducing energy use without widespread collateral damage to the economy.

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Oil-food price dynamics in an oil-dependent emerging economy

International Journal of Energy Sector Management ◽

10.1108/ijesm-03-2020-0015 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Cited By ~ 1

Author(s):

Opeoluwa Adeniyi Adeosun ◽

Olaolu Richard Olayeni ◽

Olumide Steven Ayodele

Keyword(s):

Inflation Targeting ◽

Food Prices ◽

Food Price ◽

Oil Price ◽

Price Dynamics ◽

Oil Price Shocks ◽

Price Shocks ◽

Content Type ◽

Pass Through

Purpose This paper aims to examine the transmission from oil price to local food price returns in Nigeria from January 1995 to May 2019. Design/methodology/approach To circumvent erratic behaviours and account for possibilities of noises at the edge of the wavelet signals, the paper combines wavelet and Markov-switching techniques to determine the significance and magnitude of oil–food price dynamics across different time scales. Findings It is shown that oil to food price pass-through changed across frequencies. Notably, results reveal a swift pass-through which signals the dominance of the direct effect of oil price shocks on food prices with evidence of weak spillover in the short term. The medium- and long-term horizons witness the dominance of the indirect effect of oil price shocks with much sluggish transmission to food prices; the highest significant pass-through of about 4% are also observed when the oil price is denominated in the naira–USD exchange rate. Originality/value The study improves understanding of the relationship between oil price shocks and domestic food price returns. It shapes policy prescription on appropriate inflation targeting strategies of monetary authorities.

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Monetary policy and the effect of the transfer of oil prices to inflation

Voprosy Ekonomiki ◽

10.32609/0042-8736-2020-8-41-50 ◽

2020 ◽

pp. 41-50

Author(s):

Ph. S. Kartaev ◽

I. D. Medvedev

Keyword(s):

Monetary Policy ◽

Inflation Targeting ◽

Dynamic Models ◽

Oil Prices ◽

Oil Price ◽

Oil Price Shocks ◽

Negative Effects ◽

Price Shocks ◽

Policy Regime ◽

The Impact

The paper examines the impact of oil price shocks on inflation, as well as the impact of the choice of the monetary policy regime on the strength of this influence. We used dynamic models on panel data for the countries of the world for the period from 2000 to 2017. It is shown that mainly the impact of changes in oil prices on inflation is carried out through the channel of exchange rate. The paper demonstrates the influence of the transition to inflation targeting on the nature of the relationship between oil price shocks and inflation. This effect is asymmetrical: during periods of rising oil prices, inflation targeting reduces the effect of the transfer of oil prices, limiting negative effects of shock. During periods of decline in oil prices, this monetary policy regime, in contrast, contributes to a stronger transfer, helping to reduce inflation.

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