Commodity price uncertainty and international trade

Dimitrios Bakas, Ioanna Konstantakopoulou and Athanasios Triantafyllou

European Review of Agricultural Economics, 2023, vol. 50, issue 4, 1453-1481

Abstract: We empirically investigate the impact of commodity price uncertainty on US and Euro Area (EA) trade flows. Our results indicate that the response of US and EA trade flows to commodity uncertainty shocks is larger, in magnitude and persistence, when compared with the respective impact of commodity supply and demand shocks. Moreover, our analysis shows that a one-standard deviation shock in commodity price volatility has a higher (in magnitude) and more persistent effect on trade when compared with the respective shocks in exchange rates and commodity prices. Finally, an uncertainty shock in various agricultural and metals markets has a similar negative impact on trade flows to that of energy uncertainty shocks.

Keywords: commodity price uncertainty; volatility; international trade (search for similar items in EconPapers)
Date: 2023
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