How to Understand High Food Prices

By C. Gilbert. 2010

782 citations recorded by the source corpus.

Commodity price booms are best explained by macroeconomic rather than market-specific factors. I argue that the rise in food prices over 2007 and the first half of 2008 should be seen as part of the wider commodity boom which is largely the result of rapid economic growth in China and throughout Asia in a context of loose money and in which, because of previous low investment, supply was inelastic. The demand for grains and oilseeds as biofuel feedstocks was the main cause of the price rise but macroeconomic and financial factors explain its extent. The futures market may be an important monetary transmission mechanism, but it is commodity investors, not speculators, who, by investing in commodities as an asset class, may have generalized prices rises across markets.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/1594dd823eb8232cf54dcb61f3042b3822d31cdb

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Citations in the corpus

The impact of uncertainty shocks on the volatility of commodity prices (2018, background): “…is associated with higher commodity prices (see Frankel and Hardouvelis, 1985; Gordon and Rowenhorst, 2006; Frankel, 2008; Frankel and Rose, 2010; Gilbert, 2010; Anzuini et al., 2013; Frankel, 2013; Gubler and Hertweck, 2013; Hammoudeh et al., 2015), we find that the uncertainty about the future…”
Commodity Booms and Busts (2011, background): “Others argued that the boom constituted a speculative bubble (Khan 2009) and that index fund speculation played a key role (Baffes & Haniotis 2010, Gilbert 2010), arguments that were refuted convincingly by Irwin & Sanders (2011).”
On the effects of world stock market and oil price shocks on food prices: An empirical investigation based on TVP-VAR models with stochastic volatility (2014, background): “It is argued that food commodities are having as much interest in portfolio allocation as crude oil prices have (Gilbert, 2010).”
Volatility spillover between oil and agricultural commodity markets (2013, methodology): “In order to assess the volatility spillover between world oil and agricultural commodity prices, this study adopts causality in variance test recently developed by Hafner and Herwartz (2006). In examining volatility spillover between two series, Cheung and Ng (1996) and Hong (2001) developed a causa”
Nonlinear Granger Causality: Guidelines for Multivariate Analysis (2013, neutral): “As suggested by Gilbert (2010), future contracts are the major transition channel through which macro variables affect food prices.”
Global Food Price Volatility and Spikes: An Overview of Costs, Causes, and Solutions (2012, methodology): “They differ from traditional speculators in terms of holding positions, commodity mix, and maturity period of their contracts (for instance see Gilbert 2010).”
The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses (2015, neutral): “Some others find no direct causal link between the prices of energy and non-energy commodities (Saghaian 2010; Gilbert 2010; Zhang et al. 2010; Reboredo 2012.”
The Economics of Grain Price Volatility (2011, neutral): “13See Abbott et al. (2008, 2009), Mitchell (2008), Timmer (2008), Headey and Fan (2008) and Gilbert (2008).”
The rise of flex crops and commodities: implications for research (2016, background): “As several scholars have documented, the recent spikes in – and subsequent volatility of – agricultural commodity prices cannot be explained by underlying market fundamentals (Clapp 2009, 2014; Gilbert 2010; Ghosh, Heintz, and Pollin 2012; Spratt 2013).”
Market interdependence and volatility transmission among major crops (2016, methodology): “23 We include variables widely used in previous studies on price co-movement (for example, Deb, Trivedi, and Varangis 1996; Ai, Chatrath, and Song 2006; Le Pen and Sévi 2010; Gilbert 2010; Natanelov et al. 2011), conditional also on being available on a daily, weekly, and monthly basis.”
Oil price, agricultural commodity prices, and the dollar: A panel cointegration and causality analysis (2012, background): “Others attribute the link between agricultural and oil prices to the rising production of biofuels (Gilbert, 2010; Mitchell, 2008; Rosegrant et al., 2008; Zhang et al, 2010).”