Effects of Global Liquidity on Commodity and Food Prices

Abstract

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The development trinity: How regional integration impacts growth, inequality and poverty

“…This is specifically important in light of the dependence on primary commodities and food markets and their influence on growth in developing countries (see Belke & Schnabl, ). Empirical evidence suggests that in the last three decades, there has been a significant change in the way the global commodity and primary markets operate which has also affected the market fundamentals (e.g., Belke, Bordon, & Volz, )—which is captured by the GMM estimator.…”

Global Determinants of the Gold Price: A Multivariate Cointegration Analysis

“…Comparing the findings to the previous literature, it can be concluded that the general implications which have been empirically shown for various commodity and food prices (see, for instance, Belke et al ., ) also hold for the price of gold in the long run. Global excess liquidity, measured as the difference between global money and global output, significantly enters a long‐run equilibrium relationship with the real price of gold.…”

“…However, turning to the more general field of commodities and asset prices, there are a number of papers investigating the relationships between money, output, consumer prices, commodity prices, stocks, and housing prices by means of multivariate cointegration analysis (CVAR) for a number of countries, aggregating the respective time series to obtain “global” measures for the country sample (e.g., Giese and Tuxen, , Belke et al ., ,b and Belke et al ., ). The general conclusion is that global money growth has in many cases contributed to price increases in the respective variables.…”

“…This approach is similar to Belke et al . () who include the BRIC countries in a similar way, although the country sample differs slightly and the BRIC countries enter at other times. This “global” approach especially addresses the fact that considerable gold demand comes from China and India by including these countries.…”

“…() and Beyer and Juselius (), and applied, for instance, by Giese and Tuxen (), Belke et al . (,b, ) . Additionally, the real gold price (LBMA Gold Price) is included.…”