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Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia

This study investigates the main sources of recent inflationary pressures from 1999Q1 to 2019Q4 using linear and non-linear Auto-Regressive Distributed Lag (ARDL) Models. It also examines the pass-through effects and causality between food and non-food prices using Dynamic Ordinary Least Square (DOL...

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Detalles Bibliográficos
Autores principales: Demeke, Helen, Tenaw, Dagmawe
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8605288/
https://www.ncbi.nlm.nih.gov/pubmed/34825086
http://dx.doi.org/10.1016/j.heliyon.2021.e08375
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author Demeke, Helen
Tenaw, Dagmawe
author_facet Demeke, Helen
Tenaw, Dagmawe
author_sort Demeke, Helen
collection PubMed
description This study investigates the main sources of recent inflationary pressures from 1999Q1 to 2019Q4 using linear and non-linear Auto-Regressive Distributed Lag (ARDL) Models. It also examines the pass-through effects and causality between food and non-food prices using Dynamic Ordinary Least Square (DOLS) estimation and Toda-Yamamoto Granger Causality approach. The main findings of this study indicate that inflation expectation, money supply growth, world food price, real income, and food supply are found as the main short-run and long-run drivers of food inflation. While, non-food inflation appears to be mainly explained by expected inflation, exchange rate, administered price, and world non-food price level. The results further reveal that exchange rate, real income, world price, and food supply have asymmetric effects on the overall inflationary process. On the other hand, evidence of second-round effects between food and non-food prices is confirmed although a strong and long-lasting effect comes from food prices. The Granger causality test results also support a two-way causality between the two price groups. After all, this study suggests considering the specific behaviors and sources of food and non-food prices, as well as the transmission effects between them so as to effectively control the underlying inflationary shocks and maintain price stability in the economy.
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spelling pubmed-86052882021-11-24 Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia Demeke, Helen Tenaw, Dagmawe Heliyon Research Article This study investigates the main sources of recent inflationary pressures from 1999Q1 to 2019Q4 using linear and non-linear Auto-Regressive Distributed Lag (ARDL) Models. It also examines the pass-through effects and causality between food and non-food prices using Dynamic Ordinary Least Square (DOLS) estimation and Toda-Yamamoto Granger Causality approach. The main findings of this study indicate that inflation expectation, money supply growth, world food price, real income, and food supply are found as the main short-run and long-run drivers of food inflation. While, non-food inflation appears to be mainly explained by expected inflation, exchange rate, administered price, and world non-food price level. The results further reveal that exchange rate, real income, world price, and food supply have asymmetric effects on the overall inflationary process. On the other hand, evidence of second-round effects between food and non-food prices is confirmed although a strong and long-lasting effect comes from food prices. The Granger causality test results also support a two-way causality between the two price groups. After all, this study suggests considering the specific behaviors and sources of food and non-food prices, as well as the transmission effects between them so as to effectively control the underlying inflationary shocks and maintain price stability in the economy. Elsevier 2021-11-13 /pmc/articles/PMC8605288/ /pubmed/34825086 http://dx.doi.org/10.1016/j.heliyon.2021.e08375 Text en © 2021 The Author(s) https://creativecommons.org/licenses/by-nc-nd/4.0/This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
spellingShingle Research Article
Demeke, Helen
Tenaw, Dagmawe
Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title_full Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title_fullStr Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title_full_unstemmed Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title_short Sources of recent inflationary pressures and interlinkages between food and non-food prices in Ethiopia
title_sort sources of recent inflationary pressures and interlinkages between food and non-food prices in ethiopia
topic Research Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8605288/
https://www.ncbi.nlm.nih.gov/pubmed/34825086
http://dx.doi.org/10.1016/j.heliyon.2021.e08375
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