The Transmission of Oil and Food Prices to Consumer Prices: Evidence for the MENA Countries
Ansgar Belke and
Christian Dreger
No 1332, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
Abstract:
This paper investigates the effects of global oil and food price shocks to consumer prices in Middle East-North African (MENA) countries using threshold cointegration methods. Oil and food price shocks increase domestic prices in the long run, whereby the impact of food prices dominates. While global prices are weakly exogenous, consumer prices respond to deviations from the equilibrium relationship. The short run adjustment pattern exhibits asymmetries and is particularly strong after positive shocks. Downward rigidities on wages may play a crucial role in this regard, as the relatively weak reactions of consumer prices after negative shocks are related to labour market institutions and public subsidies. The more rigid the regulations the more pronounced are the asymmetries. Robustness checks show that international price shocks do not affect GDP growth.
Keywords: Oil and food price transmission; asymmetric error correction; MENA region (search for similar items in EconPapers)
JEL-codes: C22 E31 Q2 (search for similar items in EconPapers)
Pages: 25 p.
Date: 2013
New Economics Papers: this item is included in nep-afr, nep-agr, nep-ara and nep-ene
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Citations: View citations in EconPapers (2)
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Working Paper: The Transmission of Oil and Food Prices to Consumer Prices – Evidence for the MENA Countries (2013) 
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1332
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