The Linkages between Crude Oil and Food Prices

This paper aims to indicate the linkages between crude oil prices and selected food price indexes (dairy, meat, oils, cereals, and sugar) and provide an empirical specification of the direction of the impact. This paper reviews the fuel–food price linkage models with consideration to the time series literature. This study adopts several methods, namely the Augmented Dickey–Fuller test, Granger causality test, the cointegration test, the vector autoregression model, and the vector error correction model, for studying the price transmission among the crude oil and five selected food groups. The data series covers the period between January 1990 and September 2020. The empirical results from the paper indicate that there are long-term relationships between crude oil and meat prices. The linkage of crude oil prices occurred with food, cereal, and oil prices in the short term. Furthermore, the linkages between the analyzed variables increased in 2006–2020.

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The Transmission of Global Commodity Prices to Consumer Prices in a Commodity Import-Dependent Country: Evidence from Morocco

Scientific Annals of Economics and Business ◽

10.47743/saeb-2020-0002 ◽

2020 ◽

Vol 67 (1) ◽

pp. 15-32

Author(s):

Mounir El-Karimi ◽

El-Ghini Ahmed

Keyword(s):

Commodity Prices ◽

Oil Prices ◽

Commodity Price ◽

Food Prices ◽

Food Price ◽

Oil Price ◽

Causality Test ◽

Consumer Prices ◽

Short Run ◽

The Impact

This paper uses the Breitung and Candelon (2006) causality test to examine the effect of global oil and food price changes on the inflation in Morocco over the period from 1998Q1 to 2018Q1. The results show significant transmission from oil and food prices to domestic inflation. Specifically, the food prices are shown more important than oil prices in explaining inflation in the short-run, which reflects the high weight of food in the consumption basket. However, the effect of oil prices on inflation is much more persistent than the effect of food prices. Furthermore, the impact of commodity price shocks on inflation exhibits asymmetries. The oil price hikes affect more weakly the inflation than oil price decreases, whereas the food price increases are more transmitted to inflation than food price decreases. Our findings may provide useful information to researchers and policymakers in formulating more appropriate monetary policy.

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Determinants of Inflation in Vietnam: A VECM Approach

Journal of Asian Business and Economic Studies ◽

10.24311/jabes/2015.22.4.02 ◽

2015 ◽

Vol 22 (04) ◽

pp. 26-50

Author(s):

Ngoc Tran Thi Bich ◽

Huong Pham Hoang Cam

Keyword(s):

Interest Rate ◽

Crude Oil ◽

Error Correction ◽

Budget Deficit ◽

Oil Prices ◽

Crude Oil Prices ◽

Domestic Credit ◽

Short Run ◽

The Impact

This paper aims to examine the main determinants of inflation in Vietnam during the period from 2002Q1 to 2013Q2. The cointegration theory and the Vector Error Correction Model (VECM) approach are used to examine the impact of domestic credit, interest rate, budget deficit, and crude oil prices on inflation in both long and short terms. The results show that while there are long-term relations among inflation and the others, such factors as oil prices, domestic credit, and interest rate, in the short run, have no impact on fluctuations of inflation. Particularly, the budget deficit itself actually has a short-run impact, but its level is fundamentally weak. The cause of the current inflation is mainly due to public's expectations of the inflation in the last period. Although the error correction, from the long-run relationship, has affected inflation in the short run, the coefficient is small and insignificant. In other words, it means that the speed of the adjustment is very low or near zero. This also implies that once the relationship among inflation, domestic credit, interest rate, budget deficit, and crude oil prices deviate from the long-term trend, it will take the economy a lot of time to return to the equilibrium state.

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ANALYZING THE ASYMMETRIC EFFECTS OF CRUDE OIL PRICE CHANGES ON CHINA’S PETROLEUM PRODUCT PRICES

The Singapore Economic Review ◽

10.1142/s021759081950070x ◽

2020 ◽

pp. 1-20

Author(s):

XIANCHUN LIAO ◽

JUNGHO BAEK

Keyword(s):

Crude Oil ◽

Oil Prices ◽

Price Transmission ◽

Gasoline Prices ◽

Distributed Lag ◽

Nonlinear Ardl ◽

Crude Oil Prices ◽

Long Run ◽

Pass Through ◽

Asymmetric Cointegration

As the world’s second-largest crude oil consumer, China depends on imports for approximately 60% and domestic production for approximately 40%, of its oil demand. Therefore, it is very interesting to assess the pass-through effects of both domestic and international crude oil prices to gasoline and diesel prices. After the short- and long-run investigations using the nonlinear autoregressive distributed lag (ARDL) methodology of Shin et al. [Shin, Y, BC Yu and M Greenwood-Nimmo (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework” Festschrift in Honor of Peter Schmidt: Econometric Methods and Applications, R Sickels and W Horrace (eds.), pp. 281–314. Springer.], we find overwhelming evidence supporting the asymmetric price transmission mechanism between crude oil prices and gasoline prices in both the short- and long-run. In the case of diesel prices, on the other hand, the asymmetry effects seem likely to be a long-run phenomenon.

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Do Tense Geopolitical Factors Drive Crude Oil Prices?

Energies ◽

10.3390/en13164277 ◽

2020 ◽

Vol 13 (16) ◽

pp. 4277

Author(s):

Fen Li ◽

Zhehao Huang ◽

Junhao Zhong ◽

Khaldoon Albitar

Keyword(s):

Crude Oil ◽

Oil Prices ◽

Causal Link ◽

Short Term ◽

Causality Test ◽

Dynamic Correlation ◽

Crude Oil Prices ◽

Political Events ◽

Real Factor ◽

Copula Approach

Geopolitical factors are considered a crucial factor that makes a difference in crude oil prices. Over the last three decades, many political events occurred frequently, causing short-term fluctuations in crude oil prices. This paper aims to examine the dynamic correlation and causal link between geopolitical factors and crude oil prices based on data from June 1987 to February 2020. By using a time-varying copula approach, it is shown that the correlation between geopolitical factors and crude oil prices is strong during periods of political tensions. The GPA (geopolitical acts) index, as the real factor, drives the rise in prices of crude oil. Moreover, the dynamic correlation between geopolitical factors and crude oil prices shows strong volatility over time during periods of political tensions. We also found unidirectional causality running from geopolitical factors to crude oil prices by using the Granger causality test.

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THE EFFECT OF TRANSFERING ISRAEL CAPITAL CITY TO JERUSALEM TOWARD INDONESIA MACRO ECONOMY

EKUITAS (Jurnal Ekonomi dan Keuangan) ◽

10.24034/j25485024.y2019.v3.i2.4111 ◽

2020 ◽

Vol 3 (2) ◽

pp. 260-282

Author(s):

Liliek Nur Sulistiyowati

Keyword(s):

Exchange Rate ◽

Interest Rate ◽

Crude Oil ◽

Interest Rates ◽

Oil Prices ◽

Donald Trump ◽

State Budget ◽

Crude Oil Prices ◽

Macroeconomic Indicators ◽

The Impact

United States President Donald Trump has just issued a controversial policy by giving Jerusalem recognition as the capital of Israel. This controversial policy triggered a strong reaction from a number of countries, especially Islamic countries including Indonesia. Indonesia through President Jokowidodo strongly condemned the policy of moving the Israeli capital to Jerusalem because it would disrupt political and security stability in the Middle East region. In the midst of the political impact caused by President Donald Trump's policies also affected the global economy. The world stock exchanges reacted immediately with the existence of these policies, one of which was the fall of the stock market index in Japan and South Korea due to investor concerns. The impact of the policies implemented by President Donald Trump also affected the Indonesian economy. This policy will affect the financial markets and capital markets in Indonesia. Trump's policy triggered an increase in the US $ exchange rate against the currencies of other countries including the Indonesian currency. Some of the negative effects on the Indonesian economy were the increase in world crude oil prices. Indonesia is currently no longer an oil exporting country, so that with the increase in world crude oil prices it will provide a fiscal burden in the State Budget (APBN). Fuel subsidies in the state budget will increase along with the increase in world crude oil prices that occur. In addition to the impact on the rupiah exchange rate against the US $, Donald Trump's policy also affects the inflation rate and the SBI interest rate. Through 2018, Bank Indonesia has raised the SBI interest rate by 150 basis points (bps) or 1.5%. The BI Governor explained that one reason for changing the benchmark interest rate was US monetary policy. The determination of high SBI interest rates also had an effect on reducing inflationary pressures. This study aims to look at the influence of President Donald Trump's policies regarding the transfer of the Israeli capital to Jerusalem against Indonesia's macroeconomic indicators. Indonesia's macroeconomic indicators are seen from 3 variables, such as the inflation rate, SBI interest rates and the rupiah exchange rate against US $ Key words : Donald Trump, inflation, SBI interest rates, exchange rates / exchange rates

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GLOBAL CRUDE OIL PRICE AND DOMESTIC FOOD COMMODITY PRICES: EVIDENCE FROM INDONESIA

Buletin Ilmiah Litbang Perdagangan ◽

10.30908/bilp.v14i1.406 ◽

2020 ◽

Vol 14 (1) ◽

pp. 95-120

Author(s):

Tiara Kencana Ayu

Keyword(s):

Panel Data ◽

Crude Oil ◽

Local Food ◽

Price Change ◽

Commodity Prices ◽

Oil Prices ◽

Jel Classification ◽

Crude Oil Prices ◽

The Impact ◽

Food Commodity

Abstrak Penelitian untuk menganalisis hubungan antara harga minyak dunia dan harga komoditi pangan di pasar domestik masih jarang ditemukan. Dengan membuat Model Panel Data dari 34 provinsi di Indonesia pada tahun 2010-2017, penelitian ini bertujuan untuk menginvestigasi pengaruh perubahan harga minyak dunia terhadap beberapa harga komoditi pangan lokal (kedelai,import, kedelai lokal, beras lokal, dan jagung lokal). Hasil penelitian ini mengindikasikan bahwa harga minyak dunia dapat memengaruhi harga pangan lokal di Indonesia melalui tingginya biaya pengiriman pada aktivitas impor. Selain itu, harga komoditi pangan dunia juga terbukti dapat memengaruhi harga seluruh komoditi pangan lokal yang diteliti, yang mengimplikasikan bahwa harga komoditi pangan di Indonesia dipengaruhi oleh kondisi pasar internasional. Hasil penelitian ini memberikan masukan bagi pembuat kebijakan di Indonesia untuk mempertimbangkan perubahan harga minyak dunia dan harga komoditi global dalam menstabilkan harga komoditi lokal di Indonesia, terutama komoditi yang diimpor. Abstract Globally, studies examining the nexus between global crude oil prices and food commodity prices in domestic markets are scant. Employing a panel data model of 34 provinces in Indonesia from 2010 - 2017, this study investigates the impact of global crude oil’s price change on some local food commodity prices (imported soybean, local soybean, local rice, and local maize). Previous studies found that local food commodity prices in some countries were not affected by global crude oil prices; however, this study, by controlling other factors which could affect local commodity prices, finds different results. This study’s findings indicate that global crude oil prices could affect Indonesia’s local commodity prices due to higher shipping costs in import activity. In addition, global commodity prices are also proved to affect all commodities examined in this study, which implies that local food commodity prices in Indonesia are influenced by the international market. This study provides input to policymakers in Indonesia to consider the movement of global crude oil prices and global commodity prices in stabilizing local food commodity prices in Indonesia, especially the imported commodities. JEL Classification: F15, O13, Q11

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Impact of food price increases on poverty in Indonesia: empirical evidence from cross-sectional data

Journal of Asian Business and Economic Studies ◽

10.1108/jabes-06-2021-0066 ◽

2022 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Faharuddin Faharuddin ◽

M. Yamin ◽

Andy Mulyana ◽

Y. Yunita

Keyword(s):

Rural Areas ◽

Household Survey ◽

Food Prices ◽

Food Price ◽

Food Groups ◽

Cross Sectional ◽

Content Type ◽

Price Increases ◽

Household Survey Data ◽

The Impact

PurposeUsing cross-sectional household survey data, this paper aims to determine the impact of food price increases on poverty in Indonesia.Design/methodology/approachThis paper uses the quadratic almost ideal demand system applied to the 2013 Indonesian household survey data. The impact of food price increase on household welfare is calculated using a welfare measure, compensating variation.FindingsThree food groups with the most outstanding price impact on poverty are rice, vegetables and fish were studied. The 20% increase in the price of each food group causes an increase in the headcount ratio by 1.360 points (rice), 0.737 points (vegetables) and 0.636 points (fish). Maintaining food price stability for these food groups is very important because the more price increases, the more impact on poverty. Food price policies in rural areas are also more critical than in urban areas because the impact of food price increases in rural areas is higher.Research limitations/implicationsThis paper does not consider the positive impact of rising food prices on food-producing households.Practical implicationsImplementing appropriate poverty alleviation policies through food policies for main food groups and social protection.Social implicationsPromoting rural development policies and agricultural growth.Originality/valueThis paper contributes to the existing literature by providing empirical results regarding the impact of domestic food prices increase on poverty in Indonesia.

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Oil Prices, Exchange Rates, And Inflation Expectations In South Africa

International Business & Economics Research Journal (IBER) ◽

10.19030/iber.v14i4.9351 ◽

2015 ◽

Vol 14 (4) ◽

pp. 587

Author(s):

Kin Sibanda ◽

Progress Hove ◽

Genius Murwirapachena

Keyword(s):

South Africa ◽

Exchange Rates ◽

Crude Oil ◽

Positive Impact ◽

Oil Prices ◽

Policy Framework ◽

Series Data ◽

Inflation Expectations ◽

Crude Oil Prices ◽

The Impact

Informed inflation expectations facilitate the extemporisation of a proper monetary policy framework that allows for the achievement of economic objectives, among them price stability. This study used the vector autoregression model to assess the impact of crude oil prices and exchange rates on inflation expectations in South Africa. Monthly time-series data for the period July 2002 to March 2013, obtained from the electronic database of the South African Reserve Bank were used. The study obtained statistically significant results suggesting that both crude oil prices and the exchange rates have a positive impact on inflation expectations in South Africa.

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The dynamic information spill-over effect of WTI crude oil prices on China’s traditional energy sectors

China Agricultural Economic Review ◽

10.1108/caer-05-2017-0094 ◽

2018 ◽

Vol 10 (3) ◽

pp. 516-534 ◽

Cited By ~ 5

Author(s):

Yue-Jun Zhang ◽

Yao-Bin Wu

Keyword(s):

Crude Oil ◽

Stock Returns ◽

Oil Prices ◽

Petroleum Processing ◽

Time Varying ◽

Causality Test ◽

Content Type ◽

Market Values ◽

Crude Oil Prices ◽

Linear And Nonlinear

PurposeThe purpose of this paper is to explore the dynamic influence of WTI crude oil returns on the stock returns of China’s traditional energy sectors, including oil and gas exploitation, coal mining and processing, petroleum processing and coking, electricity, heat production and supply and mining services.Design/methodology/approachHong’s information spill-over test and the DP Granger causality test are applied to investigate the relationship between the two markets. Moreover, a rolling window is introduced into the above two tests to capture time-varying characteristics of the influence of WTI crude oil returns.FindingsThe empirical results indicate that, first, there exists significant bidirectional linear causality between WTI crude oil returns and China’s traditional energy sectoral stock returns, but the nonlinear causality appears weaker. Second, the influence of WTI crude oil returns on traditional energy sectoral stock returns has time-varying characteristics and industry heterogeneity both in the linear and nonlinear cases. Finally, the decline of WTI crude oil prices may strengthen its linear influence on the stock returns of traditional energy sectors, while the excessive rise of market values in traditional energy sectors may weaken the linear and nonlinear influence of WTI on them.Originality/valueThe general nexus between international crude oil market and China’s traditional energy stock market is explored both in the linear and nonlinear perspectives. In particular, the dynamic linear and nonlinear influence of WTI crude oil returns on China’s traditional energy sectoral stock returns and its industry heterogeneity are analysed in detail.

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