Bubbles in Agricultural Commodity Markets of China

• Main Authors: Xi-Xi Zhang, Lu Liu, Chi-Wei Su, Ran Tao, Oana-Ramona Lobonţ, Nicoleta-Claudia Moldovan
• Format: Article
• Language: English
• Published: Hindawi-Wiley 2019-01-01
• Series: Complexity
• Online Access: http://dx.doi.org/10.1155/2019/2896479

We employ the generalized supremum augmented Dickey–Fuller test to examine whether there are multiple bubbles in Chinese agricultural commodities. The proposed approach is suitable for time series data and identifies the origination and termination of multiple bubbles. The results indicate the existence of bubbles for some agricultural commodity prices, such as garlic, ginger, corn, and wheat prices, that deviate from their intrinsic values upon market fundamentals. The bubbles in the garlic and ginger market are related to speculative activities. The other bubbles, in the corn and wheat market, are associated with the rising oil price, international market, and the negative effect of stockpiling policy. The authorities should recognize bubbles and observe their evolutions, leading to Chinese agricultural commodity price stabilization. These findings suggest corresponding measures to be implemented. China should establish a unified market information release platform to avoid speculative activities and formulate a market-oriented agricultural policy to enhance competitiveness among the international markets.