Effects of crude oil prices on copper and maize prices

Abstract

AbstractThis study explains the effects of crude oil prices on copper and maize prices. Vector autoregressive and vector error correction models are used to study the relationship between oil prices and prices of copper and maize. The commodity price data used consist of average monthly prices of each of the commodities: crude oil, copper and maize for the months January 1982 to June 2021. For robustness, the analysis was also run on a sample of the same data for the period January 2000 to June 2021. A long-run relationship was found between crude oil and copper prices on the one hand and maize prices on the other for the 1982 to 2021 period at the 5% significance level. The same was not true for the shorter sample (2000 to 2021). Granger causality flowing from crude oil prices alone to copper and maize prices was not found. Recommendations that are useful for energy, mining, agriculture and general development policy and practice are made. The findings are also useful for bilateral and multilateral aid discussions. The limitations of the study and recommendations for future scholarship are also made.