Evaluating price transmission between global agricultural markets and consumer food price indices in the European Union. (24th December 2015)

• Record Type: Journal Article
• Authors: García‐Germán, Sol; Bardají, Isabel; Garrido, Alberto
• Is Part Of: Agricultural economics. Volume 47:Number 1(2016)
• Page Start: 59
• Page End: 70
• Publication Date: 2015-12-24
• Subjects: E31 -- Q02 -- Q11 -- Q17 -- Commodity prices -- Consumer food prices -- Error correction models -- Price transmission -- European Union; Agriculture -- Economic aspects -- Periodicals; 338.105
• DOI: 10.1111/agec.12209
• Languages: English
• ISSNs: 0169-5150

Abstract

Abstract: This paper uses error correction models to evaluate the extent to and speed at which world agricultural commodity price movements affect consumer food prices in the European Union member states. We consider three types of world commodity price indices, each containing different commodities and weighting criteria. Results reveal a long‐run relationship between world agricultural commodity and consumer food prices in over half of the member states. Consumer prices in different member states and categories of member states respond differently to specific world price indices, suggesting that there are disparities in the structure and the efficiency of their food markets. The eurozone founders generally have lower transmission elasticities. This should be taken into account when predicting the impacts of extreme world price volatility and consumer food price rises, prompting governments to pay attention to the most vulnerable households.