Abstract
This paper assesses empirically the effects of real oil price shocks on the food inflation in Kazakhstan for the monthly period 2004-2019 by using a VAR model. Standard unit root tests do not yield reliable results in the presence of breaks. In this regard, Zivot-Andrews (1992) has been tested with the help of unit root test. Food prices have been proven to be I(1) according to the Zivot-Andrews (1992) test, while I(0) is according to the ADF test. In subsequent steps, the causality test of the variables was performed. According to the test, there is a double-chance causality between oil prices and food prices. The short-term effect of the variables is investigated with the help of the VAR model. As a result, crude oil prices have an indirect impact on food prices.
Highlights
In the last decade, food and oil price changes in the world market began to affect the socio-economic development and stability of the world countries
The most controversial of them is the increase in the agricultural commodityand food prices
After the financial crisis of 2008, expansionist monetary policies followed by Central Banks (CB) of western countries, the integration of commodity markets with the financial system, and the increased demand of developing countries for key inputscontributed greatly to the increase in good and commodity prices
Summary
Food and oil price changes in the world market began to affect the socio-economic development and stability of the world countries. The most controversial of them is the increase in the agricultural commodityand food prices. After the financial crisis of 2008, expansionist monetary policies followed by Central Banks (CB) of western countries, the integration of commodity markets with the financial system, and the increased demand of developing countries for key inputscontributed greatly to the increase in good and commodity prices
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