Food Price Pass-Through in the Euro Area: Non-Linearities and the Role of the Common Agricultural Policy

Gianluigi Ferrucci, Rebeca Jiménez-Rodríguez and Luca Onorantea
Additional contact information
Gianluigi Ferrucci: European Central Bank
Luca Onorantea: European Central Bank
Authors registered in the RePEc Author Service: Luca Onorante

International Journal of Central Banking, 2012, vol. 8, issue 1, 179-218

Abstract: In this paper we analyze the pass-through of a commodity price shock along the food price chain in the euro area. Departing from the existing literature, which focuses on food commodity prices as quoted in international markets, we use a novel database that accounts for the role of the Common Agricultural Policy in the European Union. We model several departures from the linear pass-through benchmark and compare alternative specifications with aggregate and disaggregate data. Overall, when the appropriate data set and methodology are used, it is possible to identify a significant and long-lasting pass-through. The results of our regressions are applied to the food price shock in the 2007–08 period; a decomposition exercise shows that commodity prices are the main determinant of the increase in producer and consumer prices, thus solving the puzzle highlighted in the existing literature for the euro area.

JEL-codes: C32 C53 E3 Q17 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.ijcb.org/journal/ijcb12q1a9.pdf (application/pdf)
http://www.ijcb.org/journal/ijcb12q1a9.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2012:q:1:a:9

Access Statistics for this article

International Journal of Central Banking is currently edited by Loretta J. Mester

More articles in International Journal of Central Banking from International Journal of Central Banking
Bibliographic data for series maintained by Bank for International Settlements ().