Social and economic aspects of the recent fall in global oil prices

2019 ◽  
Vol 13 (2) ◽  
pp. 258-276 ◽  
Author(s):  
Saeed Solaymani
Keyword(s):  
Government Expenditure ◽  
Commodity Prices ◽  
Oil Price ◽  
Government Expenditures ◽  
Agricultural Commodity ◽  
Poverty Level ◽  
Content Type ◽  
Agriculture Sector ◽  
Oil Revenues ◽  
Entire Economy

Purpose The global energy market has been facing lower prices of crude oil in recent years. Lower fuel price leads to lower transport cost and cheaper agricultural inputs (such as pesticides and chemical fertilizer), resulting in lower prices of agricultural commodities in the international markets. On the other hand, lower global oil price reduces the oil revenues of oil exporting countries, resulting in a decrease in government expenditures. Therefore, the purpose of this study is to examine the impacts of lower global oil and agricultural commodity prices and government expenditure on the entire economy and poverty level of Malaysia. Design/methodology/approach This study used a computable general equilibrium model (CGE) to investigate four simulation scenarios based on the latest Malaysia’s input-output table belonging to 2010. The first scenario is a 30 per cent fall in the export and import prices of agricultural commodity prices, while the second is a 50 per cent decline in the export and import prices of crude oil, and the third combines them. In the fourth scenario, government operating expenditure declines by 4 per cent because of the fall in government’s oil revenues as a result of the decline in global oil prices. Findings The simulation results suggest that lower international oil price decreases real gross domestic product (GDP) and investment in Malaysia and influences positively the output and employment of some agriculture sectors. However, lower agricultural commodity price increases real GDP and investment in the country and negatively influences the output, employment and exports of all agriculture sectors. The decline in government expenditures also increases the output and the employment in the economy, whereas it decreases household consumption. In conclusion, results show that the agriculture sector losses from the current decline in international agricultural commodity prices, while it benefits from lower oil and government expenditure. Originality/value The main contribution of this study is comparing the impacts of recent falls in global oil and agricultural prices on the entire economy and agriculture sector of Malaysia. Investigating the impacts of these issues on the poverty level of Malaysian households is another contribution to the study. Another contribution is analyzing the impact of a reduction in government expenditures because of the decline in global oil price on the economy and welfare of Malaysia. Therefore, this study makes a useful contribution to the small literature of the topic.

Oil and agricultural commodity prices in Nigeria

2019 ◽  
Vol 13 (2) ◽  
pp. 377-401 ◽  
Author(s):  
Ismail Olaleke Fasanya ◽  
Temitope Festus Odudu ◽  
Oluwasegun Adekoya
Keyword(s):  
Structural Breaks ◽  
Structural Changes ◽  
Commodity Prices ◽  
Oil Prices ◽  
Oil Price ◽  
Agricultural Commodity ◽  
Content Type ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
The Relationship

Purpose This paper aims to model the relationship between oil price and six major agricultural commodity prices using monthly data from January 1997 to December 2016. Design/methodology/approach The authors use both the linear autoregressive distributed lag by Pesaran et al. (2001) and the nonlinear autoregressive distributed lag by Shin et al. (2014), and they also account for structural breaks using the Bai and Perron (2003) test that allows for multiple structural changes in regression models. Findings These findings are discernible from the authors’ analyses. First, the linear analysis indicates a significant positive effect of oil prices on the agricultural commodity prices, which supports evidence on the non-neutrality hypothesis. Second, oil price asymmetries seem to matter more when dealing with agricultural commodity prices, except for groundnut. Third, it may be necessary to pre-test for structural breaks when modelling the relationship between oil price and agricultural prices regardless of the commodity being analysed. Fourth, the asymmetric effect for the agricultural commodity prices is non-neutral to oil prices, except for rice in the case of structural breaks. Originality/value This paper contributes to the on-going debate on the oil–agricultural commodity nexus using the recent technique of asymmetry and also considering the role structural breaks play in the relationship between oil price and agricultural commodity prices.

Oil price to stay low in near and likely medium term

2020 ◽  
Keyword(s):  
Oil Price ◽  
Content Type ◽  
Transportation Demand ◽  
Profit Margins ◽  
Services Sector ◽  
Oil Companies ◽  
Financial Pressure ◽  
Global Economic Growth ◽  
Oil Revenues ◽  
The Impact

Subject Oil market dynamics. Significance The price of crude oil, already weakened by the impact of the COVID-19 outbreak on demand, has plummeted this month after Russia refused to agree to further output cuts in coordination with OPEC. The plunge in the oil price will exert huge financial pressure on economies heavily dependent on oil revenues, including Saudi Arabia. Oil companies, particularly US shale oil producers, will also be under pressure. Impacts Budgetary pressures will sharply reduce petro-economies’ GDP growth this year, exerting a sizeable drag on global economic growth. Net importing nations will see little benefit from the sharp price drop until transportation demand recovers from the impact of COVID-19. Oil is losing market share in transportation usage, but cheap oil poses a risk to this; regulation will maintain the direction of travel. The oil services sector will face huge pressure on profit margins.

scholarly journals Pengaruh pertumbuhan ekonomi, tingkat kemiskinan, pengeluaran pemerintah, tingkat pengangguran terbuka terhadap Indeks Pembangunan Manusia (IPM) Provinsi-provinsi di Sumatera

2019 ◽  
Vol 8 (3) ◽  
pp. 170-183
Author(s):  
Dzaki Furqoni ZA ◽  
Junaidi Junaidi ◽  
Adi Bhakti
Keyword(s):  
Economic Growth ◽  
Human Development ◽  
Unemployment Rate ◽  
Human Development Index ◽  
Government Expenditure ◽  
Government Expenditures ◽  
Poverty Level ◽  
Development Index ◽  
Level Government

Study are as follows: To analyze the effect of economic growth, poverty level, government expenditure and open unemployment on the Human Development Index (HDI) of the Provincial Provinces in Sumatra for the period 2013-2017. Based on the results of the study that economic growth has a significant effect on the human development index. Poverty level has a significant effect on the human development index. Open unemployment has a significant effect on the human development index. Government expenditure has a significant effect on the Human Development Index. Keywords: Economic Growth, Poverty Level, Government Expenditures, Open    Unemployment Rate, and Human Development Index.

Financialization of Indian agricultural commodities: the case of index investments

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manogna RL ◽  
Aswini Kumar Mishra
Keyword(s):  
Institutional Investors ◽  
Extreme Values ◽  
Commodity Prices ◽  
Equity Markets ◽  
Commodity Markets ◽  
Agricultural Products ◽  
Agricultural Commodities ◽  
Agricultural Commodity ◽  
Content Type ◽  
Index Value

PurposeThe phenomenon known as financialization of commodities, arising from the speculation in commodity derivatives market, has raised serious concerns in the recent past. This has prompted distortion in agricultural commodity prices driving them away from rational levels of supply and demand shocks. In the backdrop of financialized commodities leading to increase in price of agricultural products and their interaction with equity markets, the authors examine the investment of institutional investors in impacting the agricultural returns. The paper aims to focus on the financial mechanism that drives extreme values and the mean of agricultural returns.Design/methodology/approachThe authors employ the Threshold AutoRegressive Quantile (TQAR) methodology to find evidence of linkages between the Indian agricultural and equity markets from January 2010 to May 2020 consistent with the rise in inflows of institutional investors in agricultural markets.FindingsThe results reveal that the investors impact the agricultural commodity markets strongly when the composite commodity index value (COMDEX) is low. Additionally, in the lower extreme quantiles (0.25) of agricultural returns, the integration between the equity index and agricultural returns is found to be highly significant compared to insignificant values in the higher quantiles (0.75 and 0.95) in both the regimes. The results suggest that low values of agricultural commodities are more closely linked to equity indices when composite commodity index value is low. This implies that, at the lower quantiles of COMDEX return (bad day), the investors move to the stock market. In that way, the commodity index returns are seen to be as a strong channel for the financialization of Indian agricultural commodities and suggesting potential involvement of investors during those regime.Research limitations/implicationsRegulators need to anticipate the price fluctuations in spot and futures markets. Investors in commodity markets need to strengthen risk awareness to carry out portfolio strategies.Practical implicationsFrom policy perspective, it is of pivotal importance to enhance the understanding of the financialization of agricultural products. The findings provide reference measures to stabilize the commodity markets, alleviate price distortions and carry out further evidence of price discovery and risk management in Indian commodity markets.Originality/valueTo the best of the authors’ knowledge, this study is the first to highlight the potential influence of financial markets on the financialization of agricultural commodities in an emerging economy like India.

The Role of Oil Price in the Forecasts of Agricultural Commodity Prices

2017 ◽  
pp. 422-429
Author(s):  
Rossarin Osathanunkul ◽  
Chatchai Khiewngamdee ◽  
Woraphon Yamaka ◽  
Songsak Sriboonchitta
Keyword(s):  
Commodity Prices ◽  
Oil Price ◽  
Agricultural Commodity

scholarly journals Does Oil Price Drive World Food Prices? Evidence from Linear and Nonlinear ARDL Modeling

Economies ◽  
2019 ◽  
Vol 7 (1) ◽  
pp. 12 ◽  
Author(s):  
Mourad Zmami ◽  
Ousama Ben-Salha
Keyword(s):  
Commodity Prices ◽  
Food Prices ◽  
Food Price ◽  
Oil Price ◽  
Agricultural Commodity ◽  
Distributed Lag ◽  
Nonlinear Ardl ◽  
Long Run ◽  
Linear And Nonlinear ◽  
The Impact

The macroeconomic outcomes of oil price fluctuations have been at the forefront of the debate among economists, financial analysts and policymakers over the last decades. Among others, the oil price–food price nexus has particularly received a great deal of attention. While an abundant body of literature has focused on the linear relationship between oil price and food price, little is known regarding the nonlinear interactions between them. The aim of this paper is to conduct aggregated and disaggregated analyses of the impact of the Brent and West Texas Intermediate (WTI) oil prices on international food prices between January 1990 and October 2017. The empirical investigation is based on the estimation of linear and nonlinear autoregressive distributed lag (ARDL) models. The findings confirm the presence of asymmetries since the overall food price is only affected by positive shocks on oil price in the long-run. While the dairy price index reacts to both positive and negative changes of oil price, the impact of oil price increases is found to be greater. Finally, the asymmetry is present for some other agricultural commodity prices in the short-run, since they respond only to oil price decreases. All in all, the study concludes that studies assuming the presence of a symmetric impact of oil price on food price might be flawed. The findings are important for the undertaking of future studies and the design of international and national policies in the fight against food insecurity.

Prospects for global agriculture in the second quarter

2015 ◽  
Keyword(s):  
Southern Hemisphere ◽  
Northern Hemisphere ◽  
Negative Impact ◽  
Commodity Prices ◽  
Weather Conditions ◽  
Agricultural Commodity ◽  
Content Type ◽  
Global Demand ◽  
Global Agriculture

Subject Prospects for global agriculture in the second quarter. Significance In the last quarter of 2014 and the first quarter of 2015, abundant harvests in the northern hemisphere and moderate increases in global demand tended to suppress agricultural commodity prices. In the three months to June, similar conditions are likely to persist, albeit with two main downside risks: poor weather conditions, especially in the southern hemisphere, and the continued negative impact of Russia's food embargo on major exporters.

Oil price shocks and agricultural commodity prices

2014 ◽  
Vol 44 ◽  
pp. 22-35 ◽  
Author(s):  
Yudong Wang ◽  
Chongfeng Wu ◽  
Li Yang
Keyword(s):  
Commodity Prices ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Agricultural Commodity ◽  
Price Shocks

scholarly journals Stock returns, oil prices and leverage: evidence from US firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md Ruhul Amin ◽  
Andre Varella Mollick
Keyword(s):  
Stock Returns ◽  
Cash Flow ◽  
Commodity Prices ◽  
Oil Prices ◽  
Fixed Effect ◽  
Debt Maturity ◽  
Oil Price ◽  
Mining Sector ◽  
Content Type ◽  
Positive Effects

PurposeThis paper aims to investigate how the relation between stock returns of US firms and West Texas Intermediate (WTI) oil prices is affected by leverage from 1990 to 2020.Design/methodology/approachThis paper examines how the relationship between stock returns of US firms and WTI oil prices is affected by leverage from 1990 to 2020 using a fixed-effect model estimation framework.FindingsResults from the fixed-effect regression models suggest that leverage effects on stock returns are pervasive both in aggregate and cross-industry levels, while the mining industry is more sensitive. In addition to the positive oil price effects attenuated by leverage at the aggregate level, the authors observe stronger marginal effects of leverage only for the mining sector. Being more exposed to commodity prices, the positive effects of oil prices on stock returns in the mining sector are offset by large debt ratios. Asymmetries, effects of debt maturity structure and implications are also discussed.Research limitations/implicationsThis study is grounded on the contemporary cash flow claim of leverage NOT on the long-run effect of leverage considering cash flow constraints. The oil price increase is assumed to represent an advancement of the overall economy. This study does not capture the oil prices response to some other economic forces and vice-versa.Practical implicationsMining companies should therefore reduce the stock of debt with respect to their assets to make possible the “pass-through” from oil prices to the stock market.Originality/valuePreviously undocumented and the authors show that leverage reduces the total effect of oil prices on stock returns, consistent with the hypothesis. Asymmetric and debt maturity structures effects are also discussed.

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