Volume 21, No. 01, Month MARCH, Year 2021, Pages 159 - 170

Nexus between energy consumption and agricultural inflation: an iranian experience

Niyoosha Naraghi, Reza Moghaddasi, Amir Mohamadinejad

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The purpose of this paper is to examine an empirical method and identify the possible linkage between energy consumption and commodity prices in the context of Iran"es agriculture. Different linear and non-linear models are estimated using quarterly data over 26 years from the second quarter of 1991 to the first quarter of 2017. Our results confirm the asymmetric impact of energy consumption shocks on agricultural commodity prices. Results of the Markov switching model show that agricultural prices respond negatively to any shock from energy consumption whereas, the effect of energy consumption on agricultural commodity prices in the high inflation rate regime is less than the low inflation rate regime. The empirical evidence indicates that the probability of remaining in the high inflation rate regime equals 93%, which is more than the other regime. The agricultural inflation rate is low and in 36 seasons and high in 63 seasons. Additionally, this study found an asymmetry in the agricultural price volatilities due to most of the coefficients changing across regimes.


Agricultural prices, Energy consumption, Inflation Markov-switching autoregressive model, Iran


Published by : Asian Institute of Technology
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