External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia
Movements in palm oil price give important signals to various stakeholders of the palm oil industry in Malaysia. Thus, understanding external and internal factors that may affect the palm oil price is vital to the industry players for sustainability of their activities. This study investigates relat...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-12-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/10/1/7 |
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| author | Mohd Azlan Shah Zaidi Zulkefly Abdul Karim Noor Amirah Zaidon |
| author_facet | Mohd Azlan Shah Zaidi Zulkefly Abdul Karim Noor Amirah Zaidon |
| author_sort | Mohd Azlan Shah Zaidi |
| collection | DOAJ |
| description | Movements in palm oil price give important signals to various stakeholders of the palm oil industry in Malaysia. Thus, understanding external and internal factors that may affect the palm oil price is vital to the industry players for sustainability of their activities. This study investigates relative importance of external and internal shocks on the movement of palm oil price in Malaysia. Employing a structural vector autoregressive (SVAR) model on quarterly data from 1990 to 2019, the findings reveal that external shocks are more dominant in affecting the palm oil price. Shocks to the crude oil price, the prices of substitution goods (soybeans oil, rapeseed oil, and sunflower oil), the world palm oil price, and foreign income significantly affect the palm oil price in the short and medium run. The results also indicate that a shock to soybean oil price has a more profound effect on the palm oil price than a shock to rapeseed oil or sunflower oil prices, respectively. Likewise, shocks to incomes from India as well as from Netherlands create greater impacts on the palm oil price than a shock to income from the other trading partners, respectively. The study has shown the importance of external factors in affecting the palm oil industry. |
| first_indexed | 2024-03-10T01:36:19Z |
| format | Article |
| id | doaj.art-3f009e029a314eafb59ab890710b713c |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-10T01:36:19Z |
| publishDate | 2021-12-01 |
| publisher | MDPI AG |
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| series | Economies |
| spelling | doaj.art-3f009e029a314eafb59ab890710b713c2023-11-23T13:31:56ZengMDPI AGEconomies2227-70992021-12-01101710.3390/economies10010007External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from MalaysiaMohd Azlan Shah Zaidi0Zulkefly Abdul Karim1Noor Amirah Zaidon2Center for Sustainable and Inclusive Development Studies, Faculty of Economics and Management, University Kebangsaan Malaysia (UKM), Bangi 43600, MalaysiaCenter for Sustainable and Inclusive Development Studies, Faculty of Economics and Management, University Kebangsaan Malaysia (UKM), Bangi 43600, MalaysiaCenter for Sustainable and Inclusive Development Studies, Faculty of Economics and Management, University Kebangsaan Malaysia (UKM), Bangi 43600, MalaysiaMovements in palm oil price give important signals to various stakeholders of the palm oil industry in Malaysia. Thus, understanding external and internal factors that may affect the palm oil price is vital to the industry players for sustainability of their activities. This study investigates relative importance of external and internal shocks on the movement of palm oil price in Malaysia. Employing a structural vector autoregressive (SVAR) model on quarterly data from 1990 to 2019, the findings reveal that external shocks are more dominant in affecting the palm oil price. Shocks to the crude oil price, the prices of substitution goods (soybeans oil, rapeseed oil, and sunflower oil), the world palm oil price, and foreign income significantly affect the palm oil price in the short and medium run. The results also indicate that a shock to soybean oil price has a more profound effect on the palm oil price than a shock to rapeseed oil or sunflower oil prices, respectively. Likewise, shocks to incomes from India as well as from Netherlands create greater impacts on the palm oil price than a shock to income from the other trading partners, respectively. The study has shown the importance of external factors in affecting the palm oil industry.https://www.mdpi.com/2227-7099/10/1/7palm oil pricedomestic shocksforeign shocksMalaysiaSVAR model |
| spellingShingle | Mohd Azlan Shah Zaidi Zulkefly Abdul Karim Noor Amirah Zaidon External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia Economies palm oil price domestic shocks foreign shocks Malaysia SVAR model |
| title | External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia |
| title_full | External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia |
| title_fullStr | External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia |
| title_full_unstemmed | External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia |
| title_short | External and Internal Shocks and the Movement of Palm Oil Price: SVAR Evidence from Malaysia |
| title_sort | external and internal shocks and the movement of palm oil price svar evidence from malaysia |
| topic | palm oil price domestic shocks foreign shocks Malaysia SVAR model |
| url | https://www.mdpi.com/2227-7099/10/1/7 |
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