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Jurnal Ekonomi Malaysia

59 (2) 2025 –

Domestic Crude Palm Oil Price and Its Production in Malaysia: Does It Has Asymmetric and Linear Relationship?
Harga Minyak Sawit Mentah dan Pengeluarannya di Malaysia : Adakah Ia Mempunyai Hubungan Assimetri dan Linear?

Faculty of Business
UNITAR International University
Tierra Crest, Jalan SS 6/3, SS 6
47301 Petaling Jaya, Selangor, MALAYSIA.

mohdabdulhamidbinhashim@gmail.com

Faculty of Business
UNITAR International University
Tierra Crest, Jalan SS 6/3, SS 6
47301 Petaling Jaya, Selangor, MALAYSIA.

nikhasfizul.safuri@unitar.my

Abstract

This research investigates the long-run relationship between domestic crude palm oil (CPO) prices and production in Malaysia, focusing on the existence of co-integration, linearity, and symmetry in their interactions. Using monthly data from 2015 to 2019, the analysis applies several econometric techniques, including the Granger causality test, Johansen co-integration approach, Autoregressive Distributed Lag (ARDL) model, and Nonlinear ARDL (NARDL) framework. The empirical findings from the Granger causality, Johansen co-integration, and ARDL analyses confirm a long run co-integrating relationship between domestic CPO prices and production. The ARDL results establish a significant linear association, while the NARDL model provides further evidence of a symmetric long-run relationship between the two variables. Additionally, the findings show that domestic CPO prices are endogenous within the system, whereas inflation emerges as the most exogenous factor. Crucially, domestic CPO production exerts a direct and statistically significant influence on price determination. The impulse response function (IRF) analysis indicates that shocks to the system dissipate within six months, with complete normalization occurring approximately three months later, as reflected in the persistence profile (PP). Overall, the study contributes to the literature by demonstrating that production quantity serves as the primary determinant of domestic CPO prices, thereby challenging the classical supply theory that traditionally views price as the main driver of production levels.

Keywords

Crude palm oil; domestic; export; production; variable
http://dx.doi.org/10.17576/JEM-2025-5902-8
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Hashim, M. A. H., & Hassan, N. H. (2025). Domestic Crude Palm Oil Price and Its Production in Malaysia: Does It Has Asymmetric and Linear Relationship?. Jurnal Ekonomi Malaysia, 59(2), –. http://dx.doi.org/10.17576/JEM-2025-5902-8

@article{hashim2025domestic,
  title={Domestic Crude Palm Oil Price and Its Production in Malaysia: Does It Has Asymmetric and Linear Relationship?},
  author={Hashim, Mohd Abdul Hamid and Hassan, Nik Hasfizul},
  journal={Jurnal Ekonomi Malaysia},
  volume={59},
  number={2},
  pages={—},
 

year={2025},
}

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