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    Volatility Linkages Between Energy and Food Prices: Case of Selected Asian Countries

    Taghizadeh-Hesary, Farhad; Rasoulinezhad, Ehsan; Yoshino, Naoyuki | March 2018
    Abstract
    This study examines the linkages between energy price and food prices over the period 2000–2016 by using a Panel-VAR model in the case of eight Asian economies, namely Bangladesh, the PRC, Indonesia, India, Japan, Sri Lanka, Thailand, and Viet Nam. Our results confirm that energy price (oil price) has a significant impact on food prices. According to the results of impulse response functions, agricultural food prices respond positively to any shock from oil prices. Furthermore, the findings from variance decomposition reveal that shares of oil prices in agricultural food price volatilities are the largest. In the second period 4.81%, and in the 20th period 62.49%, of food price variance is explained by oil price movements. The paper opens up new policy insight. Since inflation in oil price is harmful for food security, particularly in vulnerable economies, it would be necessary to diversify the energy consumption in this sector, from too much reliance on fossil fuels to an optimal combination of renewable and nonrenewable energy resources. In addition, the paper found that the impact of biofuel prices on food prices is statistically significant but explains less than 2% of the food price variance. However, by increasing the demand for biofuel, especially in advanced countries, there should be more concern about the global increase in agricultural commodities prices and endangering food security, especially in vulnerable economies.
    Citation
    Taghizadeh-Hesary, Farhad; Rasoulinezhad, Ehsan; Yoshino, Naoyuki. 2018. Volatility Linkages Between Energy and Food Prices: Case of Selected Asian Countries. © Asian Development Bank Institute. http://hdl.handle.net/11540/8113.
    Keywords
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic
    Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Oil and Gas Industry
    Development cooperation
    Petroleum Industry
    Transport Industry
    Social condition
    Economic dependence
    Economic assistance
    International monetary relations
    International monetary relations
    International trade
    National accounting
    Market
    Petroleum Refineries
    Petroleum Products
    Petroleum Prices
    Petroleum
    Crude Oil
    Petrochemical Industry
    Export Oriented Industries
    Exchange
    Exchange rates
    Comparative economics
    Index number
    Monetary policy
    Value analysis
    Adjustment cost
    Transaction cost
    Conditionality
    International relations
    Oil refineries
    Gasoline
    Oil
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    Citable URI
    http://hdl.handle.net/11540/8113
    Metadata
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    Author
    Taghizadeh-Hesary, Farhad
    Rasoulinezhad, Ehsan
    Yoshino, Naoyuki
    Theme
    Economics
    Industry
     
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise