ANALYSIS OF THE ASYMMETRIC IMPACTS OF OIL PRICES ON FOOD PRICES IN OIL-EXPORTING, DEVELOPING COUNTRIES
ANALYSIS OF THE ASYMMETRIC IMPACTS OF OIL PRICES ON FOOD PRICES IN OIL-EXPORTING, DEVELOPING COUNTRIES

Summary/Abstract: This study focuses on the effects of oil price changes on food prices in oil-exporting, developing countries. Theseeffects in net food-importing and oil-exporting, developing countries have not received adequate attention in theliterature. The methodology included the application of a non-linear panel autoregressive distributed lag (ARDL)model. The bounds test of the non-linear panel ARDL specification suggests the presence of co-integration amongthe variables: food prices, oil price, inflation and trade openness. The estimated non-linear panel ARDL modelindicated the presence of asymmetry in the behaviour of food prices solely in the long-run. More specifically, in thelong run, there is a significant and positive relationship between oil price increases and food prices. Meanwhile, nolong-run relation is found between oil price reduction and food prices. Furthermore, the model suggests the absenceof asymmetry in the behaviour of food prices in the short run, as the relations between both increase and reductionin oil price and food prices are found to be insignificant. The study therefore recommends that oil-exporting,developing countries should adjust the workings of their public policy schemes in such a way as to enable reductionsin the oil price to trickle down to food prices. In addition, these countries should ensure the implementation of longterm agricultural policies aimed at insulating their economies from global food crises that may arise from oil priceincreases

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