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Are International Food Price Spikes the Source of Egypt's High Inflation? / Sherine Al-Shawarby
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Al-Shawarby, Sherine
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Markets.
- Currencies and Exchange Rates.
- Domestic inflation.
- Emerging Markets.
- Food & Beverage Industry.
- Food pass-through.
- Macroeconomics and Economic Growth.
- Markets and Market Access.
- Poverty Reduction.
- VAR.
- Egypt.
- Local Subjects:
- Access to Markets.
- Currencies and Exchange Rates.
- Domestic inflation.
- Emerging Markets.
- Food & Beverage Industry.
- Food pass-through.
- Macroeconomics and Economic Growth.
- Markets and Market Access.
- Poverty Reduction.
- VAR.
- Egypt.
- Physical Description:
- 1 online resource (30 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2012
- System Details:
- data file
- Summary:
- This paper examines whether domestic inflation spikes in Egypt during 2001-2011 were primarily the result of external food price shocks. To estimate the pass-through of international food price inflation to domestic price inflation, two different methodologies are used: a two-step regression model estimates the pass-through in the long run, and a vector autoregression model provides the short-run estimates. The empirical evidence confirms that pass-through is high in the short term, but not in the long run. More precisely, the results show that (i) long-run pass-through to domestic food inflation is relatively low, lying between 13 and 16 percent, while the long-term spill-over from domestic food inflation to core inflation is moderate, lying around 60 percent; (ii) in the short term, pass-through is relatively high, estimated around 29 percent after 6 months and around two-thirds after a year, but the spill-over effect to core inflation is limited; (iii) international food price shocks explain only a small portion of domestic inflation shocks in both the short and long terms; and (iv) international price inflation has asymmetric effects on domestic prices.
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