Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation
This study examines price stickiness in the United States (US) corn market using annual series data, on the dollar price of corn per bushel, obtained from the United States Department of Agriculture (USDA) and Federal Reserve Bank of Saint Louis (FRED), between 1930 and 2017. The study implemented t...
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| Format: | Article |
| Language: | English |
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Sciendo
2021-06-01
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| Series: | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| Subjects: | |
| Online Access: | https://doi.org/10.2478/sues-2021-0008 |
| _version_ | 1811321163181195264 |
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| author | Shobande Olatunji A. Shodipe Oladimeji Tomiwa |
| author_facet | Shobande Olatunji A. Shodipe Oladimeji Tomiwa |
| author_sort | Shobande Olatunji A. |
| collection | DOAJ |
| description | This study examines price stickiness in the United States (US) corn market using annual series data, on the dollar price of corn per bushel, obtained from the United States Department of Agriculture (USDA) and Federal Reserve Bank of Saint Louis (FRED), between 1930 and 2017. The study implemented the Calvo price stick model based on an agent in a general equilibrium and New Keynesian type, simulated using DSGE-VAR. The approach permits the indexing formula to include expected corn inflation rather than lagged inflation. The results show that corn price inflation only persists by 2% every trading year, resulting from changes in the immediate future corn-price inflation and output-gap, respectively. The shock to stochastic term only causes a partial decline in the corn price, converging at a future date with its long-run equilibrium. The experiment confirmed that corn price fluctuations are beyond the purview of the domestic economy, and any attempt to impose price policies will offset the price setting, creating further distortions and a wider gap in the corn yield. The study provides fresh insight into the Calvo price stick model of the New Keynesian type and its use to forecast agricultural outcomes. |
| first_indexed | 2024-04-13T13:12:14Z |
| format | Article |
| id | doaj.art-ae8f1bea6d044ee489cbc6bc39023f04 |
| institution | Directory Open Access Journal |
| issn | 2285-3065 |
| language | English |
| last_indexed | 2024-04-13T13:12:14Z |
| publishDate | 2021-06-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice |
| spelling | doaj.art-ae8f1bea6d044ee489cbc6bc39023f042022-12-22T02:45:35ZengSciendoStudia Universitatis Vasile Goldis Arad, Seria Stiinte Economice2285-30652021-06-01312456310.2478/sues-2021-0008Price Stickiness in US-Corn Market: Evidence from Dsge-Var SimulationShobande Olatunji A.0Shodipe Oladimeji Tomiwa1Business School, University of Aberdeen, UKKansas University, USAThis study examines price stickiness in the United States (US) corn market using annual series data, on the dollar price of corn per bushel, obtained from the United States Department of Agriculture (USDA) and Federal Reserve Bank of Saint Louis (FRED), between 1930 and 2017. The study implemented the Calvo price stick model based on an agent in a general equilibrium and New Keynesian type, simulated using DSGE-VAR. The approach permits the indexing formula to include expected corn inflation rather than lagged inflation. The results show that corn price inflation only persists by 2% every trading year, resulting from changes in the immediate future corn-price inflation and output-gap, respectively. The shock to stochastic term only causes a partial decline in the corn price, converging at a future date with its long-run equilibrium. The experiment confirmed that corn price fluctuations are beyond the purview of the domestic economy, and any attempt to impose price policies will offset the price setting, creating further distortions and a wider gap in the corn yield. The study provides fresh insight into the Calvo price stick model of the New Keynesian type and its use to forecast agricultural outcomes.https://doi.org/10.2478/sues-2021-0008supply and demand shockpolicy responsesprice stickagricultural yielde0o11o13 |
| spellingShingle | Shobande Olatunji A. Shodipe Oladimeji Tomiwa Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation Studia Universitatis Vasile Goldis Arad, Seria Stiinte Economice supply and demand shock policy responses price stick agricultural yield e0 o11 o13 |
| title | Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation |
| title_full | Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation |
| title_fullStr | Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation |
| title_full_unstemmed | Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation |
| title_short | Price Stickiness in US-Corn Market: Evidence from Dsge-Var Simulation |
| title_sort | price stickiness in us corn market evidence from dsge var simulation |
| topic | supply and demand shock policy responses price stick agricultural yield e0 o11 o13 |
| url | https://doi.org/10.2478/sues-2021-0008 |
| work_keys_str_mv | AT shobandeolatunjia pricestickinessinuscornmarketevidencefromdsgevarsimulation AT shodipeoladimejitomiwa pricestickinessinuscornmarketevidencefromdsgevarsimulation |