Does Monetary Policy Have an Overshooting Influence on Agricultural Commodity Prices? Evidence from Three Covid-19 Time Points

COVID-19 has thrown a stark, harsh light on the world’s economy and has had a significant impact on monetary policies worldwide. In China, the economy is entering a new normal, and the effect of monetary policy on agricultural commodity prices has induced noticeable structural changes. The main aim of this study is to help policy-makers properly deal with agricultural price fluctuations and ensure stable economic development. The methods of this study include an overshooting model and a time-varying parameter-stochastic volatility-vector autoregression (TVP-SV-VAR) model. This research investigates the nonlinear dynamic relationship between monetary policy and agricultural commodity prices pre- and post-COVID-19 pandemic. The outcomes are consistent with the overshooting theoretical model, which indicates that the increase in money supply has a positive overshoot effect on agricultural commodity prices. We also measure the dynamic impact of money supply change on agricultural commodity prices and find pronounced random fluctuations