ASSESSING THE EFFECT OF OIL PRICES ON FOOD PRICES: THE CASE OF KAZAKHSTAN

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International Congress on Economics, Finance & Energy (EFE)
EFE2018 Book of Proceedings
ASSESSING THE EFFECT OF OIL PRICES ON FOOD PRICES: THE CASE OF KAZAKHSTAN

ASSESSING THE EFFECT OF OIL PRICES ON FOOD PRICES: THE CASE OF KAZAKHSTAN

Authors : Zhandos RANOV, Sabit BAIMAGANBETOV

Pages : 105-117

View : 83 | Download : 188

Publication Date : 2018-12-31

Abstract :There have been two shocks in oil prices over the last 10 years. This situation has a negati- ve impact on the Kazakh economy, which is based on oil. Analysis of Kazakhstan’s econo- mic structure and current export capacity shows that the most effective external factor on economic variables is oil prices. Sudden drop in oil prices reflected on Kazakhstan’s food prices and increased annual inflation rates. In this study, the effects of Brent crude oil pri- ces on food prices in Kazakhstan were examined with the help of the monthly time series between 2002 and 2017. Conventional unit root tests under structural break do not produce reliable results. In this regard, the test was performed with the help of the Zivot-Andrews (1992) unit root test. Food prices have been proven to be I(0) according to the ADF test, while according to the Zivot-Andrews (1992) test the prices are I(1). In subsequent steps, the causality test of the variables was performed. According to the test, there is a doub- le-chance causality between oil prices and food prices. The short-term effect between the variables was investigated with the help of the SVAR method. As a result, crude oil prices have an indirect impact on food prices.
Keywords : Kazakhstan, Oil Prices, Food Prices, Structural Break Unit Root Test

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