Analyzing Food Price Trends in the Context of Engel’s Law and the Prebisch-Singer Hypothesis

Etienne, Xiaoli L.; Baffes, John

Analyzing Food Price Trends in the Context of Engel’s Law and the Prebisch-Singer Hypothesis

Autores

Etienne, Xiaoli L.

Baffes, John

Editor

World Bank, Washington, DC

Descripción

Income growth in emerging economies has often been cited as a key driver of the past decade’s com-modity price boom—the longest and broadest boom since World War II. This paper shows that income has a negative and highly significant effect on real food commodity prices, a finding that is consistent with Engel’s Law and Kindleberger’s thesis, the predecessors of the Prebisch-Singer hypothe-sis. The paper also shows that, in the long run, income influences real food prices mainly through the manufacturing price channel (the deflator), hence weakening the view that income growth exerts strong upward pressure on food prices. Other (short-term) drivers of food prices include energy costs, inventories, and monetary conditions.

Palabras clave

PRODUCER PRICE INDEX, GROWTH RATES, FOOD PRICE, MONETARY POLICY, UNDERDEVELOPED COUNTRIES, PRICE INCREASES, LAGS, DEVELOPING COUNTRIES, PRICE SERIES, STOCK, ENERGY PRICES, INCOME, INTEREST, SUPPLY SHOCKS, REAL EXCHANGE RATES, POWER PARITY, EQUILIBRIUM PRICE, EXPECTATIONS, DEMAND GROWTH, COMMODITY PRICE, AVERAGE PRICES, EMERGING ECONOMIES, INTEREST RATE, EXCHANGE, GDP PER CAPITA, DEVELOPING COUNTRIES, EXPORTS, ELASTICITY, PRODUCER PRICES, POLITICAL ECONOMY, FOOD PRICES, PRICE INDICES, FISCAL POLICY, EQUILIBRIUM, VARIABLES, PRICING, EXCHANGE RATE, DEVELOPING COUNTRY, PRICE, INTEREST RATE, TREASURY BILL, INFLATION, PRICE INCREASES, PRODUCER PRICE, DEVELOPING COUNTRY, TRENDS, PRICE FLUCTUATIONS, DEVELOPMENT, INFLUENCE, PER CAPITA INCOME, MARKET REFORMS, DEVELOPMENT ECONOMICS, RESERVE BANK, PRICE CHANGES, EMERGING ECONOMIES, PRICE VOLATILITY, FOOD PRICE, PRODUCTS, EXCHANGE RATES, INTEREST RATES, INDUSTRIALIZATION, SUPPLY SHOCKS, MARKETS, MARKETING, DEBT, INTEREST RATES, AGRICULTURAL PRICES, PRICE SERIES, PRICE ELASTICITY, PRODUCT, REAL INTEREST RATE, INVENTORIES, PRICING POLICIES, CLOSED‐ECONOMY, INVENTORY, AGRICULTURAL PRICES, COMMODITY PRICE, PURCHASING POWER, POWER PARITY, MARKET PRICE, PRICE INFLATION, EXPENDITURE, INCOME MEASURES, EQUILIBRIUM PRICE, COMMODITY EXPORTS, CONSUMPTION, TECHNOLOGICAL CHANGE, MARKET PRICES, DISTRIBUTED LAGS, PRODUCER PRICES, PRICE TRENDS, AVERAGE PRICE, INTERNATIONAL TRADE, VOLATILITY, PRICING POLICIES, STANDARD OF LIVING, MARKET PRICES, FUTURE, FUTURE PRICE, VALUE, CONSUMER PRICE INDEX, PRODUCER PRICE, MONETARY POLICY, PURCHASING POWER, CONSUMER PRICE, FOREIGN INVESTMENT, DEMAND, GROWTH RATES, AGGREGATE DEMAND, CONSUMER PRICE, PRICE CHANGES, AGRICULTURE, CONSUMERS, EXPENDITURES, INCOMES, PRICE FLUCTUATIONS, EXCHANGE RATES, BORROWING COUNTRIES, AVERAGE PRICE, DEMAND GROWTH, MARKET, ENERGY PRICES, INCOME EFFECT, ECONOMICS, TREASURY, RATE OF GROWTH, PRICE MOVEMENTS, STANDARD OF LIVING, INSURANCE, TREASURY BILL, TAXATION, CURRENCIES, COMMODITY PRICES, ECONOMIC DEVELOPMENT, MANUFACTURING INDUSTRIES, TRADE, COPPER PRICE, GDP, GOODS, SECURITY, UNDERDEVELOPED COUNTRIES, STOCKS, BARTER, INVESTMENT, SHARE, ECONOMIC DEVELOPMENT, SUPPLY, PURCHASING, BANKING, FISCAL POLICY, RATE OF GROWTH, CONSUMER PRICE INDEX, INTERNATIONAL TRADE, PRODUCER PRICE INDEX, MARKET REFORMS, COMMODITIES, EXCHANGE RATE, MIDDLE‐INCOME COUNTRIES, FOOD PRICES, PRICE MOVEMENTS, PRICE INDEX, COMMODITY PRICES, COMMODITY, PRICES, ENERGY PRICE, PRODUCTION COSTS, DEVELOPMENT POLICY, INCOME GROUPS, MANUFACTURING INDUSTRIES