More On the Energy [electronic resource] : Non-Energy Commodity Price Link / Baffes, John
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TextPublication details: Washington, D.C., The World Bank, 2009Description: 1 online resource (17 p.)Subject(s): Access to Markets | Agricultural prices | Barter | Commodities | Commodity price | Commodity prices | Domestic markets | E-Business | Economic effects | Efficient market | Emerging Markets | Energy | Energy price | Energy prices | Energy Production and Transportation | Expenditures | Gold prices | Inflation | International Economics & Trade | Macroeconomics and Economic Growth | Market integration | Markets and Market Access | Natural gas | Price increase | Price increases | Price index | Price indices | Private Sector Development | Raw materialsAdditional physical formats: Baffes, John.: More On the Energy.Online resources: Click here to access online Abstract: 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.
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.
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