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Analyzing Factors Affecting U.S. Food Price Inflation

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  • Jungho Baek
  • Won W. Koo
Abstract
Since the summer of 2007, U.S. food price inflation has increased dramatically. Given public anxiety over fast‐rising food prices, this study attempts to analyze the effects of market factors—prices of energy and agricultural commodities and exchange rate—on U.S. food prices using a cointegration analysis. Results show that the agricultural commodity price and exchange rate play the key roles in determining the short‐ and long‐run movement of U.S. food prices. It is also found that in recent years, energy price has been a significant factor affecting U.S. food prices in the long run, but has little effect in the short run. This implies the strong linkage between energy and agricultural markets in the long run over the recent years. Depuis l’été 2007, l’inflation des prix des aliments aux États‐Unis a augmenté considérablement. En raison de l’anxiété que la hausse rapide des prix des aliments suscite au sein de la population, nous avons tenté d’évaluer, à l’aide d’une analyse de co‐intégration, les répercussions de certains facteurs de marché– le prix de l’énergie, le prix des produits agricoles primaires et le taux change – sur les prix des aliments aux États‐Unis. Les résultats ont montré que les prix des produits agricoles primaires et le taux de change jouent un rôle important dans la détermination des tendances à court et à long terme des prix des aliments aux États‐Unis. Nous avons également constaté que, au cours des dernières années, le prix de l’énergie a eu une forte influence sur les prix des aliments aux États‐Unis à long terme, mais peu d’influence à court terme. Cette observation montre l’étroit lien à long terme des marchés de l’énergie et des produits agricoles au cours des dernières années.

Suggested Citation

  • Jungho Baek & Won W. Koo, 2010. "Analyzing Factors Affecting U.S. Food Price Inflation," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(3), pages 303-320, September.
    • Handle: RePEc:bla:canjag:v:58:y:2010:i:3:p:303-320
    DOI: 10.1111/j.1744-7976.2010.01186.x
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    References listed on IDEAS

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    1. Abbott, Philip C. & Hurt, Christopher & Tyner, Wallace E., 2008. "What's Driving Food Prices?," Issue Reports 37951, Farm Foundation.
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    4. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    5. Søren Johansen & Rocco Mosconi & Bent Nielsen, 2000. "Cointegration analysis in the presence of structural breaks in the deterministic trend," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 216-249.
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