@article{Irz:114460,
      recid = {114460},
      author = {Irz, Xavier T. and Niemi, Jyrki S. and Xing, Liu},
      title = {DETERMINANTS OF FOOD PRICE INFLATION IN FINLAND},
      address = {2011},
      number = {726-2016-50138},
      pages = {14},
      year = {2011},
      abstract = {The agricultural commodity crisis of 2006-8 and the recent  evolution of
commodity markets have reignited anxieties in  Finland over fast-rising food
prices and food security.  Although the impact of farm commodity price shocks on
the  final consumer is mitigated by a large degree of processing  as well as the
complex structure of the food chain, little  is known about the strength of the
linkages between food  markets and input markets. Using monthly series of  price
indices from 1995 to 2010, we estimate a vector  error-correction (VEC) model in
a co-integration framework  in order to investigate the short-term and  long-term
dynamics of food price formation. The results  indicate that a statistically
significant long-run  equilibrium relationship exists between the prices of food  and
those of the main variable inputs consumed by the food  chain, namely
agricultural commodities, labour, and energy.  When judged by the magnitude of
long-run pass-through  rates, farm prices represent the main determinant of  food
prices, followed by wages in food retail and the price  of energy. However, highly
volatile energy prices are also  important in explaining food price variability.  The
parsimonious VEC model suggests that the dynamics of  food price formation is
dominated by a relatively quick  process of adjustment to the long-run
equilibrium, the half  life of the transitional dynamics being six to eight  months
following a shock.},
      url = {http://ageconsearch.umn.edu/record/114460},
      doi = {https://doi.org/10.22004/ag.econ.114460},
}