Food versus Crude Oil: What Do Prices Tell Us? Evidence from China

Yumeng Wang, Shuoli Zhao, Zhihai Yang and Donald J. Liu

No 170578, 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota from Agricultural and Applied Economics Association

Abstract: This study investigates the causal relationship between the prices of rice, crude oil, wheat, corn and soybean in China, using monthly price data over the period of January 1998 to December 2013. Employing an autoregressive distributed lag (ARDL) bounds test, we explore the cointegration relationship among the price variables. We estimate the ARDL long-run price relationship and the short-run error correction process (ARDL-EC). The results show that rice price are affected by crude oil, wheat, corn and soybean price as the forcing variables. Both the long-run and short-run price transmission elasticity estimates suggest the importance of crude oil price on the formation of rice prices in China. Furthermore, the adjustment speed coefficient is found to be statistically significant, supporting the notion that there is an error correction mechanism for maintaining the long-run price relationship facing short-run shocks.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 21
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-cna and nep-tra
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Citations: View citations in EconPapers (1)

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Journal Article: Food versus crude oil: what do prices tell us? Evidence from China (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea14:170578

DOI: 10.22004/ag.econ.170578

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