Food Price Bubbles and Government Intervention: Is China Different?

Jian Li, Chongguang Li and Jean-Paul Chavas (jchavas@wisc.edu)
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Jian Li: Huazhong Agricultural University and University of WI
Chongguang Li: Huazhong Agricultural University

Staff Paper Series from University of Wisconsin, Agricultural and Applied Economics

Abstract: The last decade has witnessed different price trajectories in the international and Chinese agricultural commodity markets. This paper compares and contrasts these dynamic patterns between markets from the perspective of price bubbles. A newly developed right-tailed unit root testing procedure is applied to detect price bubbles in the CBOT and Chinese agricultural futures market during the period 2005-2014. Results show that Chinese markets experienced less prominent speculative bubbles than the international markets for its high self-sufficiency commodities (wheat and corn), but not for low self-sufficiency commodities (soybean). The difference in price behavior is attributed to differences in market intelligence, and to Chinese agricultural policies related to trade as well as domestic government policies. Besides, it discusses challenges to the sustainability of the stable price trajectory in Chinese markets.

JEL-codes: D84 G12 G13 G14 Q14 Q18 (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-agr, nep-cna and nep-tra
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Journal Article: Food Price Bubbles and Government Intervention: Is China Different? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:wisagr:579

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