Oil Spills on Other Commodities

By J. Baffes. 2007

467 citations recorded by the source corpus.

This paper examines the effect of crude oil prices on the prices of 35 internationally traded primary commodities for the 1960-2005 period. It finds that the pass-through of crude oil price changes to the overall non-energy commodity index is 0.16. At a more disaggregated level, the fertilizer index had the highest pass-through (0.33), followed by agriculture (0.17), and metals (0.11). The prices of precious metals also exhibited a strong response to the crude oil price. In terms of individual commodities, the estimates of the food group exhibited remarkable similarity while those of raw materials and metals gave a mixed picture. The implication is that if crude oil prices remain high for some time, as most analysts expect, then the recent commodity price boom is likely to last much longer than earlier booms, at least for food commodities. The other commodities, however, are likely to follow diverging paths. On the methodological side, the results show that price indices, while providing useful summary statistics, need to be supplemented by individual commodity analysis.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4b8e789e7e81bc4370127c60525e65b830508ef5

Citations in the corpus

• Oil and food prices in Malaysia: a nonlinear ARDL analysis (2015, unknown): “In the analysis of the global food price, the long run pass-through coefficient is estimated to be 0.18 by Baffes (2007).”
• How to Understand High Food Prices (2010, unknown): “Bordo (1980) and C hambers and Just (1982), who considered the impact of monetary growth on agricultural prices, f ound that monetary expansion could raise agricultural prices relative to a more general pric e deflator.”
• Food Price Surges: Possible Causes, Past Experience, and Longer Term Relevance (2008, unknown): “A study by Baffes (2007) finds that the pass-through of petroleum prices to the prices of internationally traded non-energy primary commodities is significant, with the highest impact exerted on prices of fertilizer and food commodities.”
• Volatility spillover between oil and agricultural commodity markets (2013, unknown): “The relationship between oil and agricultural prices in terms of oil as a production cost in agriculture was examined by Baffes (2007, 2010), Harri and Hudson (2009), Chang and Su (2010), Alghalith (2010), Du et al. (2011), Alom et al. (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, unknown): “The work of Baffes (2007) has been based both on food price indices and individual food prices annual data for the 1960-2005 period analyzed through an Ordinary Least Squares regression.”
• THE ROLE OF BIOFUELS IN FOOD COMMODITY PRICES VOLATILITY AND LAND USE (2017, unknown): “Several studies have estimated the transmission elasticity of energy to non-energy prices, including food prices in the range from 0.11 to 0.16 (Baffes, 2007; De Gorter et al., 2015; Gilbert, 1989).”
• The Impact of the Oil Sector on Commodity Prices: Correlation or Causation? (2010, unknown): “Baffes (2007) showed among nonenergy commodities, oil price changes have the highest pass-through to food commodities and fertilizers . von Braun et al. (2008) found high energy prices have increased the costs of transportation and agricultural inputs such as fertilizer and pesticides, making…”