Farmgate, Processor, and Consumer Price Transmissions in the Wheat Sector
AbstractTime series techniques (vector autoregression or VAR) are employed to model a three-price dynamic system of the farmgate, processor, and consumer prices of wheat-related goods. An increase (presumably drought-induced) in farmgate wheat price is simulated to determine impacts on processor and consumer prices in the wheat sector. Several findings emerge. First, the increase in farm wheat price (PF-increase) may be expected to immediately generate processor price increases which are statistically significant for almost a year. Second, the PF-increase is expected to generate wheat-related consumer price increases, which are most significant for 22 months. Consumer price increases of wheat-related goods are expected to peak in strength at about the 8-month point following the PF-increase. And third, the consumer price increases are expected to be more gradual, less acute, but of longer duration than the processor price rises.
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Bibliographic InfoArticle provided by United States Department of Agriculture, Economic Research Service in its journal Journal of Agricultural Economics Research.
Volume (Year): (1989)
Issue (Month): 3 ()
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vector autoregression (VAR); Kloek-Van Dyk t-values; drought; decompositions of forecast error variance; farmgate; processor or industrial; and consumer prices of wheat-based goods; farm/nonfarm price transmissions; Crop Production/Industries; Farm Management;
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- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
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