Commodity price shocks are an important type of external shock and are often cited as a problem for economic growth in sub-Saharan Africa. This paper quantifies the impact of agricultural commodity price shocks using a near vector autoregressive model. The novel aspect of this model is that we define an auxiliary variable that can potentially capture the definition of a price shock that allows us to determine whether the response of per capita Gross domestic product (GDP) growth in sub-Saharan Africa to these price shocks is asymmetric. We find that there is evidence of such asymmetric responses to commodity price shocks.
Addison, T.; Ghoshray, A. Agricultural commodity price shocks and their effect on growth in sub-Saharan Africa. UNU-WIDER, Helsinki, Finland (2013) 20 pp. ISBN 978-92-9230-675-5 [WIDER Working Paper No. 2013/098]