What is it about?
Food prices can have a big impact on people's lives, especially in times of high inflation. This study looks at how decisions made by central banks—like raising or lowering interest rates—affect food prices in Hungary. Using data from 2007 to 2023, we found that while these monetary policies don’t have much immediate effect, they can actually increase food prices over the long term. This is surprising because such policies are usually expected to lower prices. Our research suggests that combining monetary policy with other tools, like government spending or agricultural improvements, is necessary to keep food prices stable and protect families, especially those with lower incomes. By understanding these dynamics, policymakers can make better decisions to reduce the burden of rising food costs.
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Why is it important?
This study uniquely examines the long-term impacts of monetary policy on food inflation in Hungary, utilizing the Nonlinear Autoregressive Distributed Lag (NARDL) model to capture asymmetries often overlooked in similar studies. Its focus on Hungary, a small open economy with disproportionately high food price inflation compared to the EU, makes it particularly timely amidst rising global inflationary pressures. The findings challenge conventional wisdom by showing that monetary tightening can paradoxically increase food prices over time. Policymakers can use these insights to craft more effective strategies combining monetary and fiscal interventions, ultimately aiding vulnerable populations disproportionately affected by food inflation. This research contributes to a better understanding of food price dynamics and has actionable implications for both national and global economic policy discussions.
Perspectives
find this publication particularly meaningful because it addresses a pressing economic challenge—the relationship between monetary policy and food inflation—through the lens of Hungary’s unique economic structure. The insights gained from this research not only contribute to academic debates but also have the potential to inform real-world policy decisions that can significantly improve the lives of vulnerable populations. For me, the most exciting aspect of this work is its ability to bridge theory and practice, offering actionable strategies to mitigate food price volatility in a rapidly changing global economy. I hope this study sparks further exploration into the nuanced dynamics of monetary policy and inspires collaborative efforts to address inflation-related challenges worldwide.
Professor Imre Fertő
Eotvos Lorand Tudomanyegyetem
Read the Original
This page is a summary of: Does Monetary Policy Stabilise Food Inflation in Hungary?, Agris on-line Papers in Economics and Informatics, December 2024, Czech University of Life Sciences Prague,
DOI: 10.7160/aol.2024.160405.
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