THE IMPACT OF OIL PRICES ON THE FOOD INFLATION IN KAZAKHSTAN

Sabit Baimaganbetov, Dinmukhamed Kelesbayev, Gulzhan Baibosynova, Рима Ибадуллаевна Ерманкулова, Botagoz Dandayeva

2021

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DOI 10.32479/ijeep.10844
Data confidence 70 medium
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Abstract

This paper assesses empirically the effects of real oil price shocks on the food inflation in Kazakhstan for the monthly period 2004-2019 by using a VAR model. Standard unit root tests do not yield reliable results in the presence of breaks. In this regard, Zivot-Andrews (1992) has been tested with the help of unit root test. Food prices have been proven to be I(1) according to the Zivot-Andrews (1992) test, while I(0) is according to the ADF test. In subsequent steps, the causality test of the variables was performed. According to the test, there is a double-chance causality between oil prices and food prices. The short-term effect of the variables is investigated with the help of the VAR model. As a result, crude oil prices have an indirect impact on food prices. Keywords: Kazakhstan, Oil Prices, Food Prices, Inflation, VAR Model, Unit-Root Test JEL Classications: E64, L66, P44, Q41 DOI: https://doi.org/10.32479/ijeep.10844