Energy Consumption and Food Price: A Quantile Regression Approach on Iranian Data

Energy and agriculture sectors play a key role in Iran's economy as the former provides considerable share of the public budget and the latter contributes significantly to employment, non-oil exports, and food self-sufficiency. Iranian government is following an energy subsidy targeting policy to increase energy (especially exhaustible ones) efficiency. Obviously, this will influence, among others, energy price and consumption, cost of production and, finally, food price. Therefore, the current study focused on the nexus between energy consumption and food price in Iranian agriculture. Since such relationships may differ as food consumption varies, the quantile regression model was applied and estimated using data for the period 1966-2017. Main findings revealed the direct and significant impact of energy consumption and globalization index on food price in the 0.75th quantile, while exchange rate showed the same effect in 0.25th and 0.75th quantiles. Furthermore, money supply was explored as another driver for food price in all quantiles.