Abstract
This study explains the effects of crude oil prices on copper and maize prices. Vector autoregressive and vector error correction models are used to study the relationship between oil prices and prices of copper and maize. The commodity price data used consist of average monthly prices of each of the commodities: crude oil, copper and maize for the months January 1982 to June 2021. For robustness, the analysis was also run on a sample of the same data for the period January 2000 to June 2021. A long-run relationship was found between crude oil and copper prices on the one hand and maize prices on the other for the 1982 to 2021 period at the 5% significance level. The same was not true for the shorter sample (2000 to 2021). Granger causality flowing from crude oil prices alone to copper and maize prices was not found. Recommendations that are useful for energy, mining, agriculture and general development policy and practice are made. The findings are also useful for bilateral and multilateral aid discussions. The limitations of the study and recommendations for future scholarship are also made.
Highlights
IntroductionMaize for example is a staple food in vast parts of Sub-Sahara Africa (SSA) and accounts for 40% of all cereals production in that region [11]
Crude oil, copper and maize are essential to both poor and rich nations
The study has explained the effects of crude oil prices on copper prices and maize price
Summary
Maize for example is a staple food in vast parts of Sub-Sahara Africa (SSA) and accounts for 40% of all cereals production in that region [11]. It is a staple food for several countries in Latin America. Sometimes called the ‘black gold,’ is arguably the most significant of the three. It is a basic input in industrial production and is used to fuel cars and planes for transportation and generate electricity for use in production of goods and services. A change in the price of oil is likely to affect several aspects of an economy
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