Food and Non-Food Prices Nexus in Developing Economies: Disaggregated Panel Data Analysis
In this paper, an attempt has been made to examine a new transmission mechanism of inflation that is effect of food prices on non-food prices. The panel generalized method of moment (GMM) has been employed on the panels of 47 developing countries disaggregated by income, i.e. low-income, lower-mi...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Johar Education Society
2018-12-01
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| Series: | Pakistan Journal of Commerce and Social Sciences |
| Subjects: | |
| Online Access: | http://jespk.net/publications/4319.pdf |
| Summary: | In this paper, an attempt has been made to examine a new transmission mechanism of
inflation that is effect of food prices on non-food prices. The panel generalized method of
moment (GMM) has been employed on the panels of 47 developing countries
disaggregated by income, i.e. low-income, lower-middle income and upper-middle
income countries. The data-set covers the time period of 2000 to 2014. The panel
Granger causality tests like error correction model, panel Stacked and Dumitrescu Hurlin
test of causality are also employed to see the direction of causality between food prices
and non-food prices. The results of panel GMM estimation indicate that food prices
positively affect non-food prices in all the income groups of economies. The causality
direction is also found from food prices to non-food prices in these groups of economies.
It concludes that inflation transmission mechanism of food prices to non-food prices
exists in developing countries. For policy making, it is suggested that any attempt to
control inflation in developing economies, one component of anti-inflationary policy
should be to control the food prices. |
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| ISSN: | 1997-8553 2309-8619 |