The Transmission of International Food Commodity Prices to China
Journal Title: Financial Markets, Institutions and Risks - Year 2018, Vol 2, Issue 3
Abstract
Food commodity prices stability is a great concern in developing countries. The food commodity prices spike during 2007-2008 has put many developing countries short of food supply. Food has been the key issue in China. In this paper, we aim to study the price stability of China’s three main food commodities, examining the transmission of world prices of rice, maize and wheat to China during the recent food commodity prices spike and the factors influencing the transmission. The study contributes to the academic research by giving new insight to the transmission of world food price to developing countries. (1) To understand the world price transmission to China for these three food commodities, we conduct econometric analysis using monthly data. We perform the unit root test using Dickey-Fuller Test with GLS detrending (DF-GSL) test for the data series and run the error-correction model (ECM) to estimate the price transmission. (2) The empirical results suggest that the price transmissions are weak, and china’s prices of these three commodities are relative stable, with speeds of adjustment less than 5%. (3) We go on to explore the factors that contribute to the week transmission. As an important factor to market price salability, China’s production of rice, maize and wheat keeps an increasing trend during the last decades. And these are the results of reforming agriculture policies in China during the past years. The reforms are related to production, price, taxation and trade, etc. (4) With the empirical results and analysis from the policy perspective, we conclude that the food prices were relative stable during the world food price spike and this is attributed to the agricultural policy reform in China.
Authors and Affiliations
He Shuquan
Keywords
Related Articles
- EP ID EP523504
- DOI 10.21272/fmir.2(3).52-61.2018.
- Views 75
- Downloads 0
Operational activity of the central bank
The paper presents the results of the investigation of central bank’s operations from theoretical and practical point of view. Theoretical aspects of the open market operations were analyzed. The definition of the open m...
Can banking innovations lead to new financial crisis: case of Central and Eastern Europe
The article analyzes the latest trends in the development of banking innovations and interdependence between the development of the real economy and the banking sector in Poland, Hungary, Czech Republic and Slo-vakia, wh...
Financial Crises and Nexus Between Economic Growth and Foreign Direct Investment
In this paper, author tried to find relation of foreign direct investment inflows with its determinants like growth rate, interest rate, exchange rate, inflation rate, fiscal deficit, openness in India during 1971-2015 t...
Ancient Sri Lankan Economic Systems
The Greek philosopher Father of History Herodotus realized the value of studying the past as not how it happened but what happened. It is also a critical analysis that shows the human development; a phenomenon that chang...
The Role of Tax Regulation in Counter-Cyclical Regulation of Banking in Ukraine
The purpose of the article is to determine the role of tax regulation of banking activity and countercyclical regulation of banking activity (on the basis of formalizing the influence of the banking system on the develop...