Food price pass-through in the euro area The role of asymmetries and non-linearities

Gianluigi Ferrucci, Rebeca Jiménez-Rodríguez and Luca Onorante

No 1168, Working Paper Series from European Central Bank

Abstract: In this paper we analyse the pass-through of a commodity price shock along the food price chain in the euro area. Unlike the existing literature, which mainly focuses on food commodity prices 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 food data. Overall, when the appropriate dataset and methodology are used, it is possible to identify a significant and longlasting food price pass-through. The results of our regressions are applied to the strong increase in food prices in the 2007-08 period; a simple decomposition exercise shows that commodity prices are the main determinant of the increase in producer and consumer prices, thus solving the pass-through puzzle highlighted in the existing literature for the euro area. JEL Classification: C32, C53, E3, Q17

Keywords: food commodity prices; inflation; non-linearities; pass-through (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-agr, nep-cba, nep-eec and nep-opm
Note: 401150
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Related works:
Working Paper: Food Price Pass-Through in the Euro Area: the Role of Asymmetries and Non-Linearities (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101168

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