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Dynamic impacts of a shock in crude oil price on agricultural chemical and fertilizer prices

Author

Listed:
  • Ronald A. Babula

    (National Aggregate Analysis Section, Economic Research Service, US Department of Agriculture (ERS|USDA))

  • Agapi Somwaru

    (Data Service Center, ERS|USDA)

Abstract

A monthly vector autoregression (VAR) model of the following prices was estimated over the 1962:1-1990:6 period: crude oil price (CRUDE), industrial chemical price (INDCHEM), agricultural chemical price (AGCHEM), and fertilizer price (FERT). The VAR was shocked with a rise in CRUDE, and dynamic impulse response patterns in AGCHEM and FERT were observed. Results suggest that AGCHEM and FERT responses would be increases; would be mild for half a year; would thereafter gain in strength and peak within 19 to 21 months; and would last for 2.0 to 2.3 years. AGCHEM and FERT would rise by about one-fourth of the percentage increase in CRUDE which occurs over the response period.

Suggested Citation

  • Ronald A. Babula & Agapi Somwaru, 1992. "Dynamic impacts of a shock in crude oil price on agricultural chemical and fertilizer prices," Agribusiness, John Wiley & Sons, Ltd., vol. 8(3), pages 243-252.
    • Handle: RePEc:wly:agribz:v:8:y:1992:i:3:p:243-252
    DOI: 10.1002/1520-6297(199205)8:3<243::AID-AGR2720080305>3.0.CO;2-K
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    Cited by:

    1. Du, Xiaodong & Yu, Cindy L. & Hayes, Dermot J., 2011. "Speculation and volatility spillover in the crude oil and agricultural commodity markets: A Bayesian analysis," Energy Economics, Elsevier, vol. 33(3), pages 497-503, May.
    2. Gardebroek, Cornelis & Hernandez, Manuel A., 2013. "Do energy prices stimulate food price volatility? Examining volatility transmission between US oil, ethanol and corn markets," Energy Economics, Elsevier, vol. 40(C), pages 119-129.
    3. Tiwari, Aviral Kumar & Nasreen, Samia & Shahbaz, Muhammad & Hammoudeh, Shawkat, 2020. "Time-frequency causality and connectedness between international prices of energy, food, industry, agriculture and metals," Energy Economics, Elsevier, vol. 85(C).
    4. Ibrahim A. ONOUR & Bruno S. SERGI, 2011. "Modeling and forecasting volatility in global food commodity prices," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(3), pages 132-139.

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