Description: More on the Energy/Non-Energy Commodity Price Link

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More on the Energy/Non-Energy Commodity Price Link

This paper examines the energy/non-energy commodity price link, based on a reduced form econometric model and using annual data from 1960 to 2008. The transmission elasticity from energy to the non-energy index is estimated at 0.28. At a more...

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Bibliographic Details
Main Author:	Baffes, John
Language:	English
Published:	2012
Subjects:	AGRICULTURAL PRICES AVAILABILITY AVAILABILITY OF DATA BARTER BIOMASS COAL COMMODITIES COMMODITY COMMODITY BOOM COMMODITY MARKET COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICE INDICES COMMODITY PRICES CRUDE OIL CRUDE OIL PRICE DATA MINING DEBT DEVELOPING COUNTRIES DEVELOPING COUNTRY DOMESTIC MARKETS DOMESTIC PRICES ECONOMIC EFFECTS EFFICIENT MARKET ENERGY MARKETS ENERGY PRICE ENERGY PRICES ENERGY TRANSMISSION EXCHANGE MARKET EXCHANGE MARKETS EXCHANGE RATES EXPENDITURES FOOD COMMODITIES FOOD PRICE GLOBAL ECONOMIC PROSPECTS GOLD PRICES INCOME INDUSTRIAL COUNTRIES INFLATION INFLATIONARY PRESSURES MARKET EFFICIENCY MARKET INEFFICIENCIES MARKET INTEGRATION NATURAL GAS OIL PRICES OIL SHOCKS OIL SPILLS OILS POTASSIUM PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE MOVEMENTS PRICE SERIES PRIMARY COMMODITIES PRIMARY COMMODITY PRODUCTION PROCESS RAW MATERIALS RESULT RESULTS SEARCH SOYBEAN MEAL SOYBEAN OIL SPREAD TECHNOLOGICAL CHANGE USES WEB WORLD TRADE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090630085856 http://hdl.handle.net/10986/4174

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Summary:	This paper examines the energy/non-energy commodity price link, based on a reduced form econometric model and using annual data from 1960 to 2008. The transmission elasticity from energy to the non-energy index is estimated at 0.28. At a more disaggregated level, the fertilizer index exhibited the largest elasticity (0.55), followed by precious metals (0.46), food (0.27), metals and minerals (0.25), and raw materials (0.11). By contrast, only a few price indices responded strongly to inflation, although the trend parameter estimate (often viewed as a proxy for technological progress) is negative for agriculture and positive for metals. A key implication of the pass-through results is that for as long as energy prices remain elevated, most non-energy commodity prices are expected to be high.