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 70
- Downloads 0
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...
Stakeholder’s financial relations and bank business management efficiency: evidence from Ukraine
The paper is devoted to development of evaluation of the bank business management efficiency in the system of financial relationships of their stakeholders. Non-achievement the required level of value-added banking busin...
Assessment of institutional conditions of fiscal decentralization in Ukraine
A successful reform of financial decentralization in Ukraine requires compliance with a number of institutional conditions that will allow them to achieve their goals efficiently and without resource losses. The purpose...
Causes, Features and Consequences of Financial Crises: a retrospective cross-country analysis
Given the volatility of financial crises around the world, there is an urgent need to investigate the causes of the emergence, the peculiarities of development and the consequences of financial crises in the countries of...
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...