Agricultural Price Changes Causes Ripple Effect

With the theoretical knowledge of agricultural economics, microeconomics, andeconometrics, by using of time series HP filtering method and the conditional heteroskedasticity ofvariance model, this paper has analysis the cycle and volatility characteristics of the prices ofagriculture production materials.And then by using linear regression and path analysis, author hasexplored the causes of the price of agriculture production materials. Through analysis thetransmission mechanism of the price of agricultural production materials, author has usedState-Space Models and Vector Error Correction Model to research the spillover effects of theprice of agriculture production materials.Firstly,this paper has clarified the significance,purpose, methods and routes.And then authorhas sort out the literature on the price of agriculture production materials, and has summed up thereference and inspiration of this paper.This paper has clarified the theoretical basis of the research in Chapter3. such as the theoryon the cause of price change,including supply and demand theory; theory on the ripple effect ofthe price of agriculture production materials, including the theory of the farmers production andmanagement behavior, the theory of the fundamental status of agriculture, Cobweb theory ofagricultural products and price transmission theory and so on.This paper has researched the characteristics of the price of agriculture production materialsin Chapter4. Firstly, the author has depicted the historical trajectory of the price of agricultureproduction materials. Secondly, the author has been the trend and cycle components of thevolatility of agricultural prices by using the HP filter method. Finally, by using of ARCHmodel,the author has studied the volatility,risk-return and non-symmetry. The result hasconcluded that:since2004, the price of agriculture production materials has more substantialvolatility; there are two complete cycles, wite each cycle length of about forty months; there arenot high risk high-return characteristics, but still significant volatility and asymmetric.This paper has researched the cause of the price of agriculture production materials inChapter5, among the supply,demand,policy factors and other aspects. The author has analysisedthe causes by using of linear regression and path analysis, and found out the direct effect of thesignificant factors and indirect effects. The result has concluded that: in terms of market supply,raw materials, fuel and power purchase index has significant effect on changes in agriculturalprices; the demand side, the price of primary products and farm income have significant effect.This paper has researched the transmission of the price of agriculture production materials inChapter6,including the formation mechanism, the transmission objects and the path. Firstly, the author has studied the formation mechanism as the agricultural industry chain. Secondly, theauthor has defined the wholesale prices of agricultural products, retail food prices and foodconsumer price as agricultural prices conductive objects with the transmission mechanism of theprice of agriculture production materials. And then the author has researched the transmissionpath,including path of cost-push and demand-driven.This paper has researched the dynamic elastic and non-symmetry of the ripple effect of theprice of agriculture production materials in Chapter7, by using of State-Space Models and VectorError Correction Model. From the cointegration analysis, author has found that the price ofagriculture production materials and the transmission objects has no long-run equilibriumrelationship. And then author has researched the dynamic flexibility of by using State-SpaceModels.The dynamic flexibility result shows that the effect of the price of agriculture productionmaterials is strongest on food CPI, followed by retail food prices, and finally the wholesale pricesof agricultural products. At the last, author has researched the asymmetric effects in pricetransmission from the strength and path. The asymmetry results indicate that the price ofagriculture production materials is based on demand-driven and cost-push supplemented.This paper has proposed the policy to inhibition the rapid rising of the price of agricultureproduction materials in Chapter8, including improved the agricultural price monitoring system,increased support for agricultural materials production enterprises, deepen the reform of theagricultural distribution system, build modern logistics system in rural areas, explored theestablishment of agricultural materials Association, continue to innovate and agricultural materialssubsidy mechanism and the development of circular agriculture.