Increases In International Prices Research Articles

Geopolitical Risk and Food Price Inflation: A GVAR Analysis of BRICS and the G7

ABSTRACT We investigate the influence of geopolitical risk on domestic food prices in 12 economies (BRICS and the G7) using a global vector autoregressive (GVAR) approach from 2003M1 to 2022M9. The results show that geopolitical risk shocks cause increases in international prices (oil, agricultural, and general commodity prices). We found that these shocks also provoke fluctuations in domestic food prices. The variance decomposition indicated that international prices and geopolitical risk contribute to the formation of domestic food prices. Finally, the estimates suggest relevant differences between the formation of domestic food prices in BRICS and G7 countries.

Economic Sustainability is the Road to Follow Towards the Future that is Changing

It is certainly singular that a large part of Western and Eastern society has experienced in the last two years a sudden rise in inflation and there has been great concern about the development and control of the rise in prices. A sudden but not unexpected increase in fossil fuels, in the face of a delay in renewable energy. Apart from the incidence of delays that favored the phenomenon, it must be said that there is a relationship between humanity's strategic objective for full neutrality with the environment and the quality of the development of economies - that is, we will be able to achieve the strategic objective of neutrality if the development of the global economy is also sustainable and supported. Well, the global picture does not seem to correspond to this evidence. Because many countries in Africa, Latin America and others have been grappling with high inflation for a long time. Furthermore, after the ruffle of inflation driven by international costs, we can see that half the globe is grappling with long-term deflation, certainly not affected by the short-term inflation caused by the costs of fossil fuels. Starting from China, which has been sending waves of deflation for some time, and from Europe itself, which welcomes them through the drop in prices of exported products and at the same time the drop in export prices in Europe for reasons of competitiveness. We ask ourselves how it is possible that international cost inflation is compatible with long-term deflation in Europe. Well, international cost inflation increases but tends to decrease when a new price equilibrium is reached. Unlike classical long-term inflation and deflation, which arise due to problems in the unbalanced economy that last over time and are subject to constant acceleration that depends on the state of the economy at the time of its occurrence. It is not easy to bend the sprint of prices, except with the recessive strategy that rebalances the economy and cuts the monetary anomaly at the root. The co-presence of inflation and deflation is not surprising. But only when the growth of inflation depends on the increase in international prices and therefore almost seems to add algebraically to the coexisting classical monetary anomalies (deflation and inflation). Beyond this hypothesis, inflation and deflation cannot coexist. Beyond this hypothesis, inflation and deflation cannot coexist.

Transmisión vertical y espacial de precios en el mercado mexicano e internacional de ganado vacuno

From 2000 to 2019, the Mexican beef subsector has undergone significant structural changes; the most important was the concentration of both production and marketing stages. In 2019, the Mexican Federal Commission of Competence revealed that, Mexican households’ income diminished between 16 and 31 % due to a lack of market efficiency. In the case of meat, the reduction may be up to 98 %. In this context, the objective of this study was to examine the degree of spatial price transmission between national and international live cattle prices and the vertical transmission between live cattle prices and carcass meat prices to evaluate market efficiency. The econometric approach consists of the estimation of a vector error correction model, using monthly beef real prices, for the period 1990-2019. Findings from this research provide information for decision-makers and stakeholders in this industry: these comprehend unidirectional transmission of international beef prices to domestic beef prices and from farm price to processor price. Also point to the existence of asymmetric price transmission, which is related to whether cattle and beef prices are increasing or decreasing. Results indicate that a long-run single cointegration relationship exists between international and farmer prices, and between processor and farm price. The direction of price transmission tends to go from producers to processors and from international price to farmer price. When the international price increases, the speed of adjustment tends to be significantly slower, in contrast to when the international price decreases, resulting in a significantly faster rate of adjustment.

Price transmission between international and domestic prices in the Brazilian citrus sector

The orange juice chain is a representative sector of the Brazilian agribusiness sector and its performance warrants analysis to identify strategies to enhance its competitiveness. Analysis of asymmetry in food value chain is important because it provides valuable information on market structure and performance. We use an asymmetric threshold error correction model to examine threshold, short- and long-run asymmetries on price transmission from international to domestic prices of oranges in Brazil. We use monthly data on international frozen concentrated orange juice prices and domestic prices of oranges in Brazil for the period from January 1996 to December 2020 in the analysis. We find evidence of threshold and asymmetries in short- and long-run price transmission and asymmetric adjustment towards a long-run relationship between international and domestic orange prices in Brazil. Decreases in international prices that lead to reductions in marketing margins are passed on quickly to domestic prices, but this is not the case for increases in international prices. We discuss implications for the Brazilian citrus industry.

The Impact of China-Burkina Faso Trade on Burkina Faso Economic Growth

The impact of trade expansion of China on Burkina Faso's economy is analyzed in this work through these two channels: trade in goods and services, foreign direct investment. To capture the direct and indirect effects of Chinese trade, a computable general equilibrium model is used. The different simulations that have been used are gathered in groups. The first group includes an increase of the transfers from China to Burkina Faso by 10%, an increase of 5% of the stock of productive capital, an increase of 2% in the total factor productivity. The second group includes an expansion of the exports from Burkina Faso to China by 5%w; a decrease of international export prices of manufactured products plus an increase in international prices of export commodities; and a decrease of the international import prices of products from China. The simulation results show that the simulations of trade expansion have led to an increase of domestic prices, exports and imports from China. In addition, the effect on economic growth, value added and household’s welfare is low. Regarding the first group of simulations, the results show a decline of domestic prices, and an increase of exports and a decrease of imports. More FDI inflows induce a raise of economic growth equal to 1.90%, of total labor demand 0.08% and an increase of the average well-being of household by 1.41%. The majority of the population in Burkina Faso is cotton farmers and they are those who welfare raise the more 1.81. China’s trade expansion is now playing a very important role in the global economy. More especially to the increasing investment in developing countries, China has also gained an important place among the main countries providing development assistance. For the past 15 years, and especially since the establishment of the “Forum on China-Africa Cooperation” (FOCAC), China has been one of the main economic partners of Sub-Saharan Africa both in terms of trade, investment and development aid. Some researchers from Burkina Faso are also investigating to measure the impact of this expansion of Chinese presence and trade on economic growth and employment in Burkina Faso. Keywords: trade expansion, economic growth, impact, computable general equilibrium, simulation, China, Burkina Faso DOI: 10.7176/JESD/11-22-05 Publication date: November 30 th 2020

Rising commodity prices and welfare in Brazil

PurposeBrazil, a large developing economy whose main exports consist of primary commodities, benefited greatly from the boom in commodity prices during the first decade of the current century. However, with a large share of its population with low and very low incomes, there is a potential for some adverse redistributive effects. The purpose of this paper is to address this issue by simulating the ex ante effects using a mixed endogenous–exogenous social accounting matrix (SAM) price model.Design/methodology/approachThe methodology consists of two parts. First, using a mixed endogenous–exogenous SAM price model, the authors obtain the elasticities of domestic prices (goods, services and factors) in response to the increase in international prices of three types of commodities: agricultural, oil/gas and minerals. Second, the authors run micro-simulations at the household level on welfare effects, as well as on some distributive indices. Analysis at the regional level is also carried out.FindingsFollowing increases in the international prices of primary commodities, the responses of internal prices (goods, services and factors) mean a welfare loss all over the entire distribution of household per capita expenditure; the least affected are those households at the low end and around the median of the distribution. However, the differences among households are not very important. Moreover, once we take into account government transfers and payments from social security, the magnitude of the effects reduces even further. Also, inequality indices and poverty rates show little responsiveness to the simulated shocks. Finally, poorer regions are the most likely to be affected, but also the distribution of effects across households shows differences between regions.Originality/valueEconomies with comparative advantages in the production of primary commodities can benefit at a macro-level from the increase in the international prices of such commodities. However, when a large part of the population spends a high proportion of its income on goods whose prices may be affected by the increase in commodity prices, there is a room for some undesirable effects from a redistributive standpoint. This study provides valuable results about such potential effects for Brazil, a large developing economy.

The real estate bubble in Ireland. Policy context and responses

The impact of surges and corrections in residential property prices has been a feature of many international economies in the past two decades and was pronounced as the global financial crisis evolved from 2007 to 2015. Many European states such as Spain and Ireland were severely affected by market corrections, having experienced major property-development surges in the decade to 2007. Factors associated with such surges include a rapid growth in housing demand both for occupation and for investment purposes, often supported by relaxed credit and monetary policy stances. Many jurisdictions, including Ireland, also experienced supportive fiscal regimes, which artificially boosted investment in property acquisition and development, and ineffective planning and zoning regulatory systems for major growth centres leading to sprawl-type patterns of development. Irish residential property prices were at the top range of such international price increases and corrections, with major consequences for the general economy and the property market. This article explores the policy context which shaped the boom and bust and the policy response in place for market recovery.

Transmission of Global Commodity Prices to Domestic Producer Prices: A Comprehensive Analysis

Utilizing a comprehensive dataset that includes a sample of 104 countries for corn, 54 countries for soybeans, 82 countries for wheat, and 77 countries for rice and covers the period from 1991 to 2013, we estimate a globally comprehensive but heterogeneous (country-specific) transmission elasticities between international prices and domestic producer prices. We mainly utilize the traditional two-step Engel-Grange cointegration model and the recently developed nonlinear autoregressive distributed lags (NARD) model to estimate the transmission elasticities. We find mixed evidence on the existence of long-run relationship between international and domestic price. For corn 66 out of 104, for soybeans 27 out of 54, for wheat 47 out of 82, and for rice 49 out of 77 countries, we fail to have a long-run relationship. For corn and soybeans, the long-run relationship is evident in top producing countries whereas the converse is evident for wheat and rice, particularly for rice. We also find that the pass-through of international to domestic prices is asymmetric in the majority cases — these asymmetries are negative, i.e., the domestic producer prices react less fully to an increase in international prices than to a decrease and are acute in the short-run than the long-run. We also estimate the crop-specific short-run global mean transmission elasticities, which vary from 0.358 (corn) to 0.524 (soybeans).

Impact of International Mineral Prices on Export Trade of PNG

Impact of International Mineral Prices on Export Trade of PNG

Economy-wide impacts of biofuels in Argentina

Argentina is one of the world's largest biodiesel producers and the largest exporter, using soybeans as feedstock. Using a computable general equilibrium model that explicitly represents the biofuel industry, this study carries out several simulations on two sets of issues: (i) international markets for biofuel and feedstock, such as an increase in prices of soybean, soybean oil, and biodiesel, and (ii) domestic policies related to biofuels, such as an introduction of biofuel mandates. Both sets of issues can have important consequences to the Argentinean economy. The simulations indicate that increases in international prices of biofuels and feedstocks would increase Argentina's gross domestic product and social welfare. Increases in international prices of ethanol and corn also can benefit Argentina, but to a lesser extent. The domestic mandates for biofuels, however, would cause small losses in economic output and social welfare because they divert part of biodiesel and feedstock from exports to lower-return domestic consumption. An increase in the export tax on either feedstock or biodiesel also would lead to a reduction in gross domestic product and social welfare, although government revenue would rise.

Sustainable energy policy in Honduras: Diagnosis and challenges

In view of having a still unexploited potential of natural resources available for clean energy and the possibility of using the regional electricity market in Central America, Honduras has several potential energy sources. The growing dependence on oil and the imminent increase in international prices of fossil fuels, coupled with the necessity of changing the energy sector arrangement, the State of Honduras has taken the lead for the development of a long-term sustainable energy policy. This energy policy must be able to develop various energy sources and guide both, the government and the private sector, to the planning and development of alternative energy sources and sustainable growth of the Honduran economy. In this paper, the various energy diagnoses and the potential for changing the Honduran energy mix are presented, as well as the investment required for sustainable management of the energy sector. Furthermore, the objectives of the energy policy and plan up to the year 2030 are presented, outlining the investment possibilities for the energy sector development, showing their costs and timeframes.

Inflación en la Argentina postconvertibilidad: Algunas claves para su explicación

Este trabajo analiza el proceso inflacionario en el marco de la configuración del nuevo modelo de post-convertibilidad después del agotamiento y crisis del proceso de dolarización. Se considera como punto de partida la visión que Diamand desarrolló para explicar la dinámica del modelo de substitución de importaciones. Este análisis llega a la conclusión de que durante el periodo 2002-2007, después de la devaluación obligada, se ha profundizado la explotación de recursos naturales. En gran medida dicha explotación carece de racionalidad y planeación. Además se ha acompañado de un descenso del salario real, e incremento de la productividad del trabajo. Todo lo cual ha significado un creciente beneficio para los agentes concentrados en la cúpula empresarial que opera en Argentina, beneficiaria también del incremento de los precios internacionales.