Are international food price spikes the source of Egypt's high inflation ?

Sherine Al-Shawarby and Hoda Selim

No 6177, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines whether domestic inflation spikes in Egypt during 2001-2011 were primarily the result of external food price shocks. To estimate the pass-through of international food price inflation to domestic price inflation, two different methodologies are used: a two-step regression model estimates the pass-through in the long run, and a vector autoregression model provides the short-run estimates. The empirical evidence confirms that pass-through is high in the short term, but not in the long run. More precisely, the results show that (i) long-run pass-through to domestic food inflation is relatively low, lying between 13 and 16 percent, while the long-term spill-over from domestic food inflation to core inflation is moderate, lying around 60 percent; (ii) in the short term, pass-through is relatively high, estimated around 29 percent after 6 months and around two-thirds after a year, but the spill-over effect to core inflation is limited; (iii) international food price shocks explain only a small portion of domestic inflation shocks in both the short and long terms; and (iv) international price inflation has asymmetric effects on domestic prices.

Keywords: Food&Beverage Industry; Markets and Market Access; Currencies and Exchange Rates; Emerging Markets; Access to Markets (search for similar items in EconPapers)
Date: 2012-08-01
New Economics Papers: this item is included in nep-agr, nep-ara and nep-mac
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Related works:
Chapter: Are International Food Price Spikes the Source of Egypt’s High Inflation? (2013)
Working Paper: Are International Food Price Spikes the Source of Egypt’s High Inflation? (2012)
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