Measuring Agricultural Price Shocks in a Small Open Economy: Imported Crop in South Korea

Minseong Kang and Seungki Lee

No 379007, 2024 Conference, April 22-23, 2024, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: This paper presents a novel approach to estimating the cost pass-through between imported crop prices and domestic food prices in a small open economy through firm markups. Our approach differentiates from the existing studies by enabling the estimation of firm-level pass-through elasticities for imported crop prices. Using proprietary firm-level financial data combined with public information on imports and subsector-specific usage of 8 major crops, we study firms in the 9 sectors comprising the South Korean food industry over the 2000-2021 period. Our findings include markup polarization across firms with a particular increase in higher markup firms. We also observe considerable heterogeneity in cost pass-through elasticity across sectors and markets: ranging from 0.085 to 0.510. Additionally, our measurements reveal a growing pass-through tendency in recent years, suggesting that global crop price shocks will likely have a more substantial impact on the food supply chain in South Korea

Keywords: Agricultural and Food Policy; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 46
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccc24:379007

DOI: 10.22004/ag.econ.379007

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