An empirical analysis of the impact of global economic policy uncertainty on China's grain price volatility

YANG Guo-lei, ZHENG Mo-li, LIU Jie

(Academy of National Food and Strategic Reserves Administration, Beijing 100037, China)

Abstract: The constant adjustment of domestic and foreign economic policies not only challenges utilization of international market resources, but also may affect domestic food prices and even food production through the form of price transmission. Based on the extensive collection of relevant factors affecting the fluctuation of food prices, the method of combining principal component analysis and TVP-FAVAR model was used in this study to analyze the influence of supply and demand factors, financial and energy factors and the instability of global economic policy on grain price in China. The main findings are as follows: 1) uncertainty of global economic policy has a significant negative impact on domestic food prices. 2) the response of different types of grain prices to the impact of uncertainty is different. Based on the results of the model, this study proposes the following policy recommendations: 1) In the context of the increasingly fierce trade war between China and the United States, policy makers should adopt a combination of strategies to mitigate the impact of the international market in the face of the uncertainties in the international market. 2) Policy makers should implement differentiated price policies and adjustment means based on different grain varieties. 3) Strengthen the construction of grain market information monitoring system, improve the ability to accurately interpret market conditions based on price monitoring information, and formulate diversified price adjustment policies to offset the impact of uncertainties in the external market. 4) China can implement more free trade agreements with more countries which have grain export potential to seek more stable external supply channels for the domestic people and mitigate the adverse effects of unstable trade policies of major countries.
Key words: global economic policy instability; food prices; supply and demand factors; time varying parameter factor augmentecl VAR; three-chain coordination

Chinese Library Classification Number: F320.2；TS-9

Documentary Identification Code: A    Article ID: 1007-7561(2020)04-0001-10

Published time on CNKI: 2020-06-18 09:50:01

Published address on CNKI: https://kns.cnki.net/kcms/detail/11.3863.TS.20200617.1704.012.html