Macroeconomic impacts of global food price shocks on the economy of Turkey

https://doi.org/10.17221/261/2017-AGRICECONCitation:KAPUSUZOGLU A., LIANG X., CEYLAN N.B. (2018): Macroeconomic impacts of global food price shocks on the economy of Turkey. Agric. Econ. – Czech, 64: 517-525.
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The purpose of this study is to examine the impact of food prices on the macroeconomic variables of Turkey. The effects are investigated using monthly data for the period January 1980–January 2016. A structural vector autoregressive (SVAR) model is employed for the analysis. Impulse response functions are obtained to assess the impact of food price shocks on the macroeconomic variables of Turkey. To this end, SVAR model is employed as suggested by Cushman and Zha (1997). The impulse responses gathered suggest that the food price causes Turkish Lira (TRY) to appreciate and inflation to increase contemporaneously. This study provides an important contribution to the literature in terms of determining the factors and presenting the measures to be taken against these factors for Turkey which is a developing country and sensitive to macroeconomic factors.

References:
Abbott P.C., Hurt C., Tyner W.E. (2008): What’s driving food prices? Issue Reports 37951. Farm Foundation, Oak Brook.
 
Alom F. (2011): Economic effect of oil and food price shocks in Asia and Pacific countries: an application of SVAR model. In: Proceedings NZARES Conference. New Zealand Agricultural and Resource Economics Society, New Zealand, Aug 25–26, 2011.
 
Alom Fardous, Ward Bert D., Hu Baiding (2013): Macroeconomic effects of world oil and food price shocks in Asia and Pacific economies: application of SVAR models. OPEC Energy Review, 37, 327-372 https://doi.org/10.1111/opec.12015
 
Apergis Nicholas, Rezitis Anthony (2011): Food Price Volatility and Macroeconomic Factors: Evidence from GARCH and GARCH-X Estimates. Journal of Agricultural and Applied Economics, 43, 95-110 https://doi.org/10.1017/S1074070800004077
 
Barnett Richard C., Bessler David A., Thompson Robert L. (1983): The Money Supply and Nominal Agricultural Prices. American Journal of Agricultural Economics, 65, 303- https://doi.org/10.2307/1240878
 
BERUMENT Hakan, PASAOGULLARI Mehmet (2003): EFFECTS OF THE REAL EXCHANGE RATE ON OUTPUT AND INFLATION: EVIDENCE FROM TURKEY. The Developing Economies, 41, 401-435 https://doi.org/10.1111/j.1746-1049.2003.tb01009.x
 
Berument H., Ceylan N.B., Dogan N. (2010): The impact of oil price shocks on the economic growth of selected MENA countries. The Energy Journal, 31: 149–176.
 
Braun J.V., Tadesse G. (2012): Global Food Price Volatility and Spikes: An Overview of Costs, Causes and Solutions. ZEF Discussion Papers on Development Policy No: 161. University of Bonn, Bonn.
 
Chambers Robert G., Just Richard E. (1982): An investigation of the effect of monetary factors on agriculture. Journal of Monetary Economics, 9, 235-247 https://doi.org/10.1016/0304-3932(82)90044-7
 
Cooke B., Robles M. (2009): Recent Food Price Movements: a Time Series Analysis. IFPRI Discussion Papers 942. International Food Policy Research Institute
 
(IFPRI), Washington.
 
Cushman David O., Zha Tao (1997): Identifying monetary policy in a small open economy under flexible exchange rates. Journal of Monetary Economics, 39, 433-448 https://doi.org/10.1016/S0304-3932(97)00029-9
 
Dawe David (2001): How far down the path to free trade? The importance of rice price stabilization in developing Asia. Food Policy, 26, 163-175 https://doi.org/10.1016/S0306-9192(00)00044-0
 
Food and Agriculture Organization of the United Nations (FAO 2017) (2017): Food Price Index. Available at http://www.fao.org/worldfoodsituation/foodpricesindex/en/ (accessed Aug 2, 2017).
 
FRED (2017): Federal Reserve Economic Data, St. Louis Fed. Available at https://fred.stlouisfed.org/ (accessed Aug 16, 2017).
 
Gilbert C. L., Morgan C. W. (2010): Food price volatility. Philosophical Transactions of the Royal Society B: Biological Sciences, 365, 3023-3034 https://doi.org/10.1098/rstb.2010.0139
 
Gilbert C.L. (2010a): How to understand high food prices. Journal of Agricultural Economics, 61: 398–425.
 
Gilbert C.L. (2010b): Speculative Influences on Commodity Futures Prices 2006–08. UNCTAD Discussion Paper No: 197. United Nations Conference on Trade and Development, Geneva.
 
Global Financial Data (2017): Available at https://www.globalfinancialdata.com/ (accessed Aug 10, 2017).
 
Hochman Gal, Rajagopal Deepak, Timilsina Govinda, Zilberman David (2014): Quantifying the causes of the global food commodity price crisis. Biomass and Bioenergy, 68, 106-114 https://doi.org/10.1016/j.biombioe.2014.06.012
 
Jha S (): Grain price stabilization in India: Evaluation of policy alternatives. Agricultural Economics, 21, 93-108 https://doi.org/10.1016/S0169-5150(99)00017-1
 
Kamin Steve B., Rogers John H. (2000): Output and the real exchange rate in developing countries: an application to Mexico. Journal of Development Economics, 61, 85-109 https://doi.org/10.1016/S0304-3878(99)00062-0
 
Kavila W., Roux P.L. (2017): The Reaction of Inflation to Macroeconomics Shocks: The Case of Zimbabwe (2009–2012). Economic Research Southern Africa (ERSA) Working Paper No: 707. Economic Research Southern Africa, Cape Town.
 
Khan Muhammad Arshad, Ahmed Ayaz (2014): Revisiting the macroeconomic effects of oil and food price shocks to Pakistan economy: a structural vector autoregressive (SVAR) analysis. OPEC Energy Review, 38, 184-215 https://doi.org/10.1111/opec.12020
 
McGregor P (): Famine: a simple general equilibrium model. Oxford Economic Papers, 50, 623-643 https://doi.org/10.1093/oep/50.4.623
 
Mitchell D. (2008): A Note on Rising Food Prices. Policy Research Working Paper 4682. World Bank, Washington D.C.
 
Myers Robert J. (2006): On the costs of food price fluctuations in low-income countries. Food Policy, 31, 288-301 https://doi.org/10.1016/j.foodpol.2006.03.005
 
Newbery D.M.G., Stiglitz J.E. (1981): The Theory of Commodity Price Stabilization. Clarendon Press, Oxford.
 
Ng F., Aksoy M.A. (2008): Who are the net food importing countries? The World Bank Policy Research Working Paper No: 4457. World Bank, Washington D.C.
 
OECD (2011): Price Volatility in Food and Agricultural Markets: Policy Responses. Available at http://www.oecd.org/agriculture/ (accessed Aug 4, 2017).
 
Paladines Amaiquema J.R., Paladines Amaiquema A.R. (2017): Consequences of oil and food price shocks on the Ecuadorian economy. International Journal of Energy Economics and Policy, 7: 146–151.
 
Roache S.K. (2010): What explains the rise in food price volatility? IMF Working Paper No: WP/10/129. International Monetary Fund, Washington D.C.
 
Solaymani S., Yusoff N.Y.B.M. (2017): Poverty effects of food price escalation and mitigation options: The case of Malaysia. Journal of Asian and African Studies, 53: 1–18.
 
Tadesse Getaw, Algieri Bernardina, Kalkuhl Matthias, von Braun Joachim (2014): Drivers and triggers of international food price spikes and volatility. Food Policy, 47, 117-128 https://doi.org/10.1016/j.foodpol.2013.08.014
 
Tang Weiqi, Wu Libo, Zhang ZhongXiang (2010): Oil price shocks and their short- and long-term effects on the Chinese economy. Energy Economics, 32, S3-S14 https://doi.org/10.1016/j.eneco.2010.01.002
 
Timmer C.Peter (2000): The macro dimensions of food security: economic growth, equitable distribution, and food price stability. Food Policy, 25, 283-295 https://doi.org/10.1016/S0306-9192(00)00007-5
 
Trading Economics (2017): Turkey food inflation. Available at https://tradingeconomics.com/ (accessed June 26, 2017).
 
Williams J.C., Wright B.D. (1991): Storage and Commodity Markets. Cambridge University Press, Cambridge.
 
World Bank (2007): Commodity Markets Outlook April 2017. Available at http://www.worldbank.org/commodities (accessed July 26, 2017).
 
World Bank (2017): Agricultural Products Price Index. Available at https://data.worldbank.org (accessed July 8, 2017).
 
Zha Tao (1999): Block recursion and structural vector autoregressions. Journal of Econometrics, 90, 291-316 https://doi.org/10.1016/S0304-4076(98)00045-1
 
Abbott P.C., Hurt C., Tyner W.E. (2008): What’s driving food prices? Issue Reports 37951. Farm Foundation, Oak Brook.
 
Alom F. (2011): Economic effect of oil and food price shocks in Asia and Pacific countries: an application of SVAR model. In: Proceedings NZARES Conference. New Zealand Agricultural and Resource Economics Society, New Zealand, Aug 25–26, 2011.
 
Alom Fardous, Ward Bert D., Hu Baiding (2013): Macroeconomic effects of world oil and food price shocks in Asia and Pacific economies: application of SVAR models. OPEC Energy Review, 37, 327-372 https://doi.org/10.1111/opec.12015
 
Apergis Nicholas, Rezitis Anthony (2011): Food Price Volatility and Macroeconomic Factors: Evidence from GARCH and GARCH-X Estimates. Journal of Agricultural and Applied Economics, 43, 95-110 https://doi.org/10.1017/S1074070800004077
 
Barnett Richard C., Bessler David A., Thompson Robert L. (1983): The Money Supply and Nominal Agricultural Prices. American Journal of Agricultural Economics, 65, 303- https://doi.org/10.2307/1240878
 
BERUMENT Hakan, PASAOGULLARI Mehmet (2003): EFFECTS OF THE REAL EXCHANGE RATE ON OUTPUT AND INFLATION: EVIDENCE FROM TURKEY. The Developing Economies, 41, 401-435 https://doi.org/10.1111/j.1746-1049.2003.tb01009.x
 
Berument H., Ceylan N.B., Dogan N. (2010): The impact of oil price shocks on the economic growth of selected MENA countries. The Energy Journal, 31: 149–176.
 
Braun J.V., Tadesse G. (2012): Global Food Price Volatility and Spikes: An Overview of Costs, Causes and Solutions. ZEF Discussion Papers on Development Policy No: 161. University of Bonn, Bonn.
 
Chambers Robert G., Just Richard E. (1982): An investigation of the effect of monetary factors on agriculture. Journal of Monetary Economics, 9, 235-247 https://doi.org/10.1016/0304-3932(82)90044-7
 
Cooke B., Robles M. (2009): Recent Food Price Movements: a Time Series Analysis. IFPRI Discussion Papers 942. International Food Policy Research Institute
 
(IFPRI), Washington.
 
Cushman David O., Zha Tao (1997): Identifying monetary policy in a small open economy under flexible exchange rates. Journal of Monetary Economics, 39, 433-448 https://doi.org/10.1016/S0304-3932(97)00029-9
 
Dawe David (2001): How far down the path to free trade? The importance of rice price stabilization in developing Asia. Food Policy, 26, 163-175 https://doi.org/10.1016/S0306-9192(00)00044-0
 
Food and Agriculture Organization of the United Nations (FAO 2017) (2017): Food Price Index. Available at http://www.fao.org/worldfoodsituation/foodpricesindex/en/ (accessed Aug 2, 2017).
 
FRED (2017): Federal Reserve Economic Data, St. Louis Fed. Available at https://fred.stlouisfed.org/ (accessed Aug 16, 2017).
 
Gilbert C. L., Morgan C. W. (2010): Food price volatility. Philosophical Transactions of the Royal Society B: Biological Sciences, 365, 3023-3034 https://doi.org/10.1098/rstb.2010.0139
 
Gilbert C.L. (2010a): How to understand high food prices. Journal of Agricultural Economics, 61: 398–425.
 
Gilbert C.L. (2010b): Speculative Influences on Commodity Futures Prices 2006–08. UNCTAD Discussion Paper No: 197. United Nations Conference on Trade and Development, Geneva.
 
Global Financial Data (2017): Available at https://www.globalfinancialdata.com/ (accessed Aug 10, 2017).
 
Hochman Gal, Rajagopal Deepak, Timilsina Govinda, Zilberman David (2014): Quantifying the causes of the global food commodity price crisis. Biomass and Bioenergy, 68, 106-114 https://doi.org/10.1016/j.biombioe.2014.06.012
 
Jha S (): Grain price stabilization in India: Evaluation of policy alternatives. Agricultural Economics, 21, 93-108 https://doi.org/10.1016/S0169-5150(99)00017-1
 
Kamin Steve B., Rogers John H. (2000): Output and the real exchange rate in developing countries: an application to Mexico. Journal of Development Economics, 61, 85-109 https://doi.org/10.1016/S0304-3878(99)00062-0
 
Kavila W., Roux P.L. (2017): The Reaction of Inflation to Macroeconomics Shocks: The Case of Zimbabwe (2009–2012). Economic Research Southern Africa (ERSA) Working Paper No: 707. Economic Research Southern Africa, Cape Town.
 
Khan Muhammad Arshad, Ahmed Ayaz (2014): Revisiting the macroeconomic effects of oil and food price shocks to Pakistan economy: a structural vector autoregressive (SVAR) analysis. OPEC Energy Review, 38, 184-215 https://doi.org/10.1111/opec.12020
 
McGregor P (): Famine: a simple general equilibrium model. Oxford Economic Papers, 50, 623-643 https://doi.org/10.1093/oep/50.4.623
 
Mitchell D. (2008): A Note on Rising Food Prices. Policy Research Working Paper 4682. World Bank, Washington D.C.
 
Myers Robert J. (2006): On the costs of food price fluctuations in low-income countries. Food Policy, 31, 288-301 https://doi.org/10.1016/j.foodpol.2006.03.005
 
Newbery D.M.G., Stiglitz J.E. (1981): The Theory of Commodity Price Stabilization. Clarendon Press, Oxford.
 
Ng F., Aksoy M.A. (2008): Who are the net food importing countries? The World Bank Policy Research Working Paper No: 4457. World Bank, Washington D.C.
 
OECD (2011): Price Volatility in Food and Agricultural Markets: Policy Responses. Available at http://www.oecd.org/agriculture/ (accessed Aug 4, 2017).
 
Paladines Amaiquema J.R., Paladines Amaiquema A.R. (2017): Consequences of oil and food price shocks on the Ecuadorian economy. International Journal of Energy Economics and Policy, 7: 146–151.
 
Roache S.K. (2010): What explains the rise in food price volatility? IMF Working Paper No: WP/10/129. International Monetary Fund, Washington D.C.
 
Solaymani S., Yusoff N.Y.B.M. (2017): Poverty effects of food price escalation and mitigation options: The case of Malaysia. Journal of Asian and African Studies, 53: 1–18.
 
Tadesse Getaw, Algieri Bernardina, Kalkuhl Matthias, von Braun Joachim (2014): Drivers and triggers of international food price spikes and volatility. Food Policy, 47, 117-128 https://doi.org/10.1016/j.foodpol.2013.08.014
 
Tang Weiqi, Wu Libo, Zhang ZhongXiang (2010): Oil price shocks and their short- and long-term effects on the Chinese economy. Energy Economics, 32, S3-S14 https://doi.org/10.1016/j.eneco.2010.01.002
 
Timmer C.Peter (2000): The macro dimensions of food security: economic growth, equitable distribution, and food price stability. Food Policy, 25, 283-295 https://doi.org/10.1016/S0306-9192(00)00007-5
 
Trading Economics (2017): Turkey food inflation. Available at https://tradingeconomics.com/ (accessed June 26, 2017).
 
Williams J.C., Wright B.D. (1991): Storage and Commodity Markets. Cambridge University Press, Cambridge.
 
World Bank (2007): Commodity Markets Outlook April 2017. Available at http://www.worldbank.org/commodities (accessed July 26, 2017).
 
World Bank (2017): Agricultural Products Price Index. Available at https://data.worldbank.org (accessed July 8, 2017).
 
Zha Tao (1999): Block recursion and structural vector autoregressions. Journal of Econometrics, 90, 291-316 https://doi.org/10.1016/S0304-4076(98)00045-1
 
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