IDEAS home Printed from https://ideas.repec.org/a/gam/jagris/v12y2022i10p1526-d922474.html
   My bibliography  Save this article

The Microcosmic Mechanism and Empirical Test of Uncertainty on the Non-Linear Fluctuation of Chinese Grain Prices-Based on the Perspective of Global Economic Policy Uncertainty

Author

Listed:
  • Junguo Hua

    (College of Economic and Management, Henan Agricultural University, Zhengzhou 450000, China)

  • Hui Li

    (College of Economic and Management, Henan Agricultural University, Zhengzhou 450000, China)

  • Zejun He

    (College of Economic and Management, Henan Agricultural University, Zhengzhou 450000, China)

  • Jing Ding

    (College of Economic and Management, Henan Agricultural University, Zhengzhou 450000, China)

  • Futong Jin

    (College of Economic and Management, Henan Agricultural University, Zhengzhou 450000, China)

Abstract

The dramatic fluctuations in grain prices and the threat to grain security caused by global economic policy uncertainty have been a social concern and a challenging area for price management authorities to regulate. Based on general equilibrium analysis in microeconomics, this paper constructs a mathematical model of the impact of global economic policy uncertainty on grain price fluctuation. It then examines the micro mechanism of non-linear grain price fluctuation under the dominant market mechanism and measures the non-linear shock effect of global economic policy uncertainty on grain prices using a threshold regression model. The results show that soybean and corn prices are subject to a two-zone fluctuation pattern due to global economic policy uncertainty. The impact has significant non-linear characteristics and is significantly greater in the high zone than that in the low zone. Accordingly, this paper offers government departments advice on better regulating and managing the market supply and demand and smoothing out sharp fluctuations in grain prices caused by changes in global economic policies.

Suggested Citation

  • Junguo Hua & Hui Li & Zejun He & Jing Ding & Futong Jin, 2022. "The Microcosmic Mechanism and Empirical Test of Uncertainty on the Non-Linear Fluctuation of Chinese Grain Prices-Based on the Perspective of Global Economic Policy Uncertainty," Agriculture, MDPI, vol. 12(10), pages 1-17, September.
    • Handle: RePEc:gam:jagris:v:12:y:2022:i:10:p:1526-:d:922474
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2077-0472/12/10/1526/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2077-0472/12/10/1526/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wen, Jun & Khalid, Samia & Mahmood, Hamid & Zakaria, Muhammad, 2021. "Symmetric and asymmetric impact of economic policy uncertainty on food prices in China: A new evidence," Resources Policy, Elsevier, vol. 74(C).
    2. Joëts, Marc & Mignon, Valérie & Razafindrabe, Tovonony, 2017. "Does the volatility of commodity prices reflect macroeconomic uncertainty?," Energy Economics, Elsevier, vol. 68(C), pages 313-326.
    3. Choi, Moon Jung & Hwang, Sangyeon & Im, Hyejoon, 2022. "Cross-border trade credit and trade flows during the global financial crisis," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 497-510.
    4. Mei, Dexiang & Xie, Yutang, 2022. "U.S. grain commodity futures price volatility: Does trade policy uncertainty matter?," Finance Research Letters, Elsevier, vol. 48(C).
    5. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
    6. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    7. Zhang, Xiaoyu & Liu, Yongfu, 2020. "The dynamic impact of international agricultural commodity price fluctuation on Chinese agricultural commodity prices," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), August.
    8. Huiming Zhu & Rui Huang & Ningli Wang & Liya Hau, 2020. "Does economic policy uncertainty matter for commodity market in China? Evidence from quantile regression," Applied Economics, Taylor & Francis Journals, vol. 52(21), pages 2292-2308, May.
    9. Xiaoyong Xiao & Qingsong Tian & Shuxia Hou & Chongguang Li, 2019. "Economic policy uncertainty and grain futures price volatility: evidence from China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(4), pages 642-654, August.
    10. Erpeng Wang & Ning An & Zhifeng Gao & Emmanuel Kiprop & Xianhui Geng, 2020. "Consumer food stockpiling behavior and willingness to pay for food reserves in COVID-19," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(4), pages 739-747, August.
    11. Aftab, Muhammad & Phylaktis, Kate, 2022. "Economic integration and exchange market pressure in a policy uncertain world," Journal of International Money and Finance, Elsevier, vol. 128(C).
    12. Joëts, Marc & Mignon, Valérie & Razafindrabe, Tovonony, 2017. "Does the volatility of commodity prices reflect macroeconomic uncertainty?," Energy Economics, Elsevier, vol. 68(C), pages 313-326.
    13. Kido, Yosuke, 2018. "The transmission of US economic policy uncertainty shocks to Asian and global financial markets," The North American Journal of Economics and Finance, Elsevier, vol. 46(C), pages 222-231.
    14. Yuee Li & Jingdong Li, 2021. "How Does China’s Economic Policy Uncertainty Affect the Sustainability of Its Net Grain Imports?," Sustainability, MDPI, vol. 13(12), pages 1-21, June.
    15. Ranjit Kumar Paul & Tanmoy Karak, 2022. "Asymmetric Price Transmission: A Case of Wheat in India," Agriculture, MDPI, vol. 12(3), pages 1-17, March.
    16. Siaw Frimpong & Emmanuel N. Gyamfi & Zangina Ishaq & Samuel Kwaku Agyei & Daniel Agyapong & Anokye M. Adam & François Pérés, 2021. "Can Global Economic Policy Uncertainty Drive the Interdependence of Agricultural Commodity Prices? Evidence from Partial Wavelet Coherence Analysis," Complexity, Hindawi, vol. 2021, pages 1-13, June.
    17. Nancy Stokey, 2016. "Wait-and See: Investment Options under Policy Uncertainty," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 246-265, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laura Onofri, 2024. "Application of Econometrics in Agricultural Production," Agriculture, MDPI, vol. 14(9), pages 1-2, August.
    2. Ling Sun & Wenjing Zhang & Zijiang Hu & Zhong Ning, 2024. "Food security under global economic policy uncertainty: fresh insights from the ocean transportation of food," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 26(3), pages 414-435, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cao, Yan & Cheng, Sheng & Li, Xinran, 2023. "How economic policy uncertainty affects asymmetric spillovers in food and oil prices: Evidence from wavelet analysis," Resources Policy, Elsevier, vol. 86(PB).
    2. Long, Shaobo & Li, Jieyu & Luo, Tianyuan, 2023. "The asymmetric impact of global economic policy uncertainty on international grain prices," Journal of Commodity Markets, Elsevier, vol. 30(C).
    3. Ren, Yinghua & Tan, Anqi & Zhu, Huiming & Zhao, Wanru, 2022. "Does economic policy uncertainty drive nonlinear risk spillover in the commodity futures market?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    4. Lyu, Yongjian & Yi, Heling & Hu, Yingyi & Yang, Mo, 2021. "Economic uncertainty shocks and China's commodity futures returns: A time-varying perspective," Resources Policy, Elsevier, vol. 70(C).
    5. Mokni, Khaled & Al-Shboul, Mohammed & Assaf, Ata, 2021. "Economic policy uncertainty and dynamic spillover among precious metals under market conditions: Does COVID-19 have any effects?," Resources Policy, Elsevier, vol. 74(C).
    6. Hedi Ben Haddad & Imed Mezghani & Abdessalem Gouider, 2021. "The Dynamic Spillover Effects of Macroeconomic and Financial Uncertainty on Commodity Markets Uncertainties," Economies, MDPI, vol. 9(2), pages 1-22, June.
    7. Guo, Jiaqi & Long, Shaobo & Luo, Weijie, 2022. "Nonlinear effects of climate policy uncertainty and financial speculation on the global prices of oil and gas," International Review of Financial Analysis, Elsevier, vol. 83(C).
    8. Gilles Dufrénot & William Ginn & Marc Pourroy, 2023. "ENSO Climate Patterns on Global Economic Conditions," AMSE Working Papers 2308, Aix-Marseille School of Economics, France.
    9. Bakhsh, Satar & Zhang, Wei, 2023. "How does natural resource price volatility affect economic performance? A threshold effect of economic policy uncertainty," Resources Policy, Elsevier, vol. 82(C).
    10. Fatemeh Salimi Namin, 2020. "Exchange Rates, Stock Prices, and Stock Market Uncertainty," AMSE Working Papers 2037, Aix-Marseille School of Economics, France.
    11. Pan, Zhiyuan & Xiao, Dongli & Dong, Qingma & Liu, Li, 2022. "Structural breaks, macroeconomic fundamentals and cross hedge ratio," Finance Research Letters, Elsevier, vol. 47(PA).
    12. Liu, Yang & Han, Liyan & Xu, Yang, 2021. "The impact of geopolitical uncertainty on energy volatility," International Review of Financial Analysis, Elsevier, vol. 75(C).
    13. Nguyen, Bao H. & Okimoto, Tatsuyoshi & Tran, Trung Duc, 2022. "Uncertainty-dependent and sign-dependent effects of oil market shocks," Journal of Commodity Markets, Elsevier, vol. 26(C).
    14. Zhu, Huiming & Chen, Weiyan & Hau, Liya & Chen, Qitong, 2021. "Time-frequency connectedness of crude oil, economic policy uncertainty and Chinese commodity markets: Evidence from rolling window analysis," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    15. Scarcioffolo, Alexandre R. & Etienne, Xiaoli L., 2021. "Regime-switching energy price volatility: The role of economic policy uncertainty," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 336-356.
    16. Dogan, Eyup & Majeed, Muhammad Tariq & Luni, Tania, 2021. "Analyzing the impacts of geopolitical risk and economic uncertainty on natural resources rents," Resources Policy, Elsevier, vol. 72(C).
    17. Ding, Qian & Huang, Jianbai & Zhang, Hongwei, 2021. "The time-varying effects of financial and geopolitical uncertainties on commodity market dynamics: A TVP-SVAR-SV analysis," Resources Policy, Elsevier, vol. 72(C).
    18. Lyu, Yongjian & Wei, Yu & Hu, Yingyi & Yang, Mo, 2021. "Good volatility, bad volatility and economic uncertainty: Evidence from the crude oil futures market," Energy, Elsevier, vol. 222(C).
    19. Konstantinos Lagos & Yuan Wang, . "The threshold effects of global economic uncertainty on foreign direct investment," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    20. Akyildirim, Erdinc & Cepni, Oguzhan & Pham, Linh & Uddin, Gazi Salah, 2022. "How connected is the agricultural commodity market to the news-based investor sentiment?," Energy Economics, Elsevier, vol. 113(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jagris:v:12:y:2022:i:10:p:1526-:d:922474. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.