EconPapers    
Economics at your fingertips  
 

Oil Price Pass through to Agricultural Commodities†

Clark Lundberg, Tristan Skolrud (), Bahram Adrangi and Arjun Chatrath

American Journal of Agricultural Economics, 2021, vol. 103, issue 2, 721-742

Abstract: Energy represents an important share of production costs for many agricultural commodities. Previous studies have found mixed evidence of a pass‐through relationship between oil prices and agricultural commodity prices, a relationship that has the potential to disrupt farm‐level decision making. We propose that these mixed findings are in part due to heterogeneity in the pass‐through relationship across time horizons. We use a new wavelet‐based regression approach to explore horizon‐based heterogeneity in the relationship between oil and agricultural commodity prices. We find strong evidence of heterogeneity across time horizons and commodities. We develop a stylized model of agricultural production and show that agricultural contracts can generate price stickiness that leads to heterogeneity in input price pass through over different horizons. We also find evidence that recent technological shifts have led to a structural change in this horizon‐based heterogeneity.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1002/ajae.12088

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:wly:ajagec:v:103:y:2021:i:2:p:721-742

Access Statistics for this article

More articles in American Journal of Agricultural Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2021-07-16
Handle: RePEc:wly:ajagec:v:103:y:2021:i:2:p:721-742