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How does the self-sufficiency rate affect international price volatility transmissions in the wheat sector? Evidence from wheat-exporting countries

Economics

How does the self-sufficiency rate affect international price volatility transmissions in the wheat sector? Evidence from wheat-exporting countries

T. Tanaka and J. Guo

This research by Tetsuji Tanaka and Jin Guo delves into the intricate relationship between global and regional wheat prices, uncovering how self-sufficiency and substitutes like maize can buffer against price shocks. The analysis reveals critical insights into market resilience during crises like COVID-19.

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Playback language: English
Abstract
This article investigates the causal relationship between global and regional wheat prices in exporting countries and explores the determinants of price volatility pass-throughs. Using a GJR-GARCH model with DCC specifications, the findings indicate a bi-directional causality between world and local prices, with self-sufficiency playing a crucial role in reducing international price volatility spillovers. Consumption of substitute goods like maize or rice also acts as a shock absorber. The COVID-19 crisis and export restrictions exacerbated price instability, highlighting the importance of self-sufficiency policies for market resilience.
Publisher
Humanities and Social Sciences Communications
Published On
Jul 09, 2020
Authors
Tetsuji Tanaka, Jin Guo
Tags
wheat prices
price volatility
self-sufficiency
COVID-19
agricultural economics
export restrictions
price spillovers

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