Do oil prices drive agricultural commodity prices? Evidence from South Africa

Babajide Fowowe

Energy, 2016, vol. 104, issue C, 149-157

Abstract: The global economy has witnessed a concurrent rise in oil prices and agricultural commodities prices and this has generated interest in understanding the energy-food nexus. Many studies have attributed the rise in agricultural commodity prices to the role of world oil prices. Similar to global oil prices, South Africa experienced a surge in agricultural commodity prices from 2004 and reached a peak in 2008. This study conducts an empirical investigation of the effects of oil prices on agricultural commodity prices in South Africa. Structural breaks cointegration tests showed no evidence of a long-run relationship between oil prices and agricultural commodity prices in South Africa. Nonlinear causality tests showed no evidence that agricultural commodity prices in South Africa respond to oil prices. The results show that agricultural commodity prices in South Africa are neutral to global oil prices.

Keywords: Oil prices; Agricultural commodity prices; Causality (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (86)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:104:y:2016:i:c:p:149-157

DOI: 10.1016/j.energy.2016.03.101

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