Title: An empirical inquiry into the problem of agricultural price volatility - the case of European Union compared to the global market

Authors: Larisa-Nicoleta Pop; Ioana-Sorina Mihuţ

Addresses: Department of Economics, Faculty of Economics and Business Administration, Babes-Bolyai University, 58-60 Theodor Mihali Street, Cluj-Napoca, Romania ' Department of Economics, Faculty of Economics and Business Administration, Babes-Bolyai University, 58-60 Theodor Mihali Street, Cluj-Napoca, Romania

Abstract: Historically, the intervention measures implemented within the Common Agricultural Policy (CAP) framework managed to keep the European Union's agricultural prices at a high and stable level. As a result of the successive reforms of the CAP implemented since the early 1990s, presently, the European agricultural sector is increasingly exposed to world market price signals, since markets are closely connected. Moreover, the recent global economic turbulences showed that this 'exposure' increased beyond what was previously anticipated. The purpose of our research consists particularly in assessing the agricultural price volatility within the EU market in comparison to the global market, for three agricultural commodities - wheat, sugar and milk - for which different stabilising mechanisms were implemented throughout the CAP history. The results demonstrate particularly that different policy approaches tend to lead to differentiated outcomes regarding the volatility correlation and price processes within the two markets.

Keywords: agricultural price volatility; EU Common Agricultural Policy; CAP; agricultural markets; GARCH methodology; European Union; global markets; agricultural prices; agriculture; wheat; sugar; milk; stabilising mechanisms.

DOI: 10.1504/IJEA.2016.083164

International Journal of Economics and Accounting, 2016 Vol.7 No.4, pp.265 - 290

Received: 26 Apr 2016
Accepted: 24 Nov 2016

Published online: 21 Mar 2017 *

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