Title: Estimating global crop price elasticities: A VAR approach
Authors: Tamas Krisztin - IIASA (Austria) [presenting]
Abstract: Econometric models have been used classically to estimate price elasticities of crops. The importance of taking both the supply and the demand side into consideration when estimating elasticities has been recognized in recent literature. However, only few studies show worldwide coverage and most contribution using differing methods or data sources, thus impeding the comparability of the estimates. Moreover, as we show in a literature review, the range of price elasticities cited in literature for different crop types can vary strongly. Thus, we propose a unified estimation framework for crop price elasticities, based on publicly available time series from FAO. Our approach relies on state of the art modeling techniques, using a factor augmented Bayesian vector autoregression. Through this, our model can take into account a wide range of macroeconomic indicators. Elasticity estimates are presented for 30 global regions and 17 crop types. Moreover, we show that global economic equity indices have a considerable influence on crop prices.