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Modeling spatial price transmission in the grain markets of Ethiopia with an application of ARDL approach to white teff

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  • Kindie Getnet
  • Wim Verbeke
  • Jacques Viaene

Abstract

Following the agricultural market liberalization policy, there is an emerging grain market structure in Ethiopia in which the central wholesale market exhibits concentration of power and spatial integration with the local markets. Due to this, it is hypothesized that the central wholesale market influences the long-run price movements in the local markets. The relationship can be modeled as spatial price equilibrium with the aim to guide subsequent policy decisions with regard to public intervention in the post-liberalization period. In this study, we modeled the spatial equilibrium relationship between the producer and the wholesale prices of white teff, a major staple in Ethiopia, using the autoregressive distributed lag modeling approach to cointegration analysis. First, the existence of a nonspurious long-run relationship in levels between the producer prices in the local market and the wholesale prices in the central market is confirmed. Second, the long-run relationship and the error correction model for the producer price are estimated. The results reveal that the wholesale price of white teff in the central consumer market is a major short- and long-run determinant of the producer price in the local supply markets. Therefore, the institutional role of the government with the aim of improving producers' marketing margin and the overall performance of the grain markets in the post-liberalization period can be influenced through targeted interventions at the central wholesale market. Copyright 2005 International Association of Agricultural Economics.

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Bibliographic Info

Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 33 (2005)
Issue (Month): s3 (November)
Pages: 491-502

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Handle: RePEc:bla:agecon:v:33:y:2005:i:s3:p:491-502

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Cited by:
  1. Bartleet, Matthew & Gounder, Rukmani, 2010. "Energy consumption and economic growth in New Zealand: Results of trivariate and multivariate models," Energy Policy, Elsevier, Elsevier, vol. 38(7), pages 3508-3517, July.
  2. Durevall, Dick & Loening, Josef L. & Ayalew Birru, Yohannes, 2013. "Inflation dynamics and food prices in Ethiopia," Journal of Development Economics, Elsevier, Elsevier, vol. 104(C), pages 89-106.
  3. Jaleta, Moti & Gebremedhin, Berhanu, 2009. "Price Cointegration Analyses of Food Crop Markets: The case of Wheat and Teff Commodities in Northern Ethiopia," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 51049, International Association of Agricultural Economists.
  4. Quattri, Maria A., 2012. "On trade efficiency in the Ethiopian agricultural markets," 123rd Seminar, February 23-24, 2012, Dublin, Ireland, European Association of Agricultural Economists 122512, European Association of Agricultural Economists.
  5. Stephan Brosig & Thomas Glauben & Linde Götz & Enno‐Burghard Weitzel & Ahmet Bayaner, 2011. "The Turkish wheat market: spatial price transmission and the impact of transaction costs," Agribusiness, John Wiley & Sons, Ltd., vol. 27(2), pages 147-161, Spring.
  6. Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank.
  7. Getnet, Kindie, 2008. "From market liberalization to market development: The need for market institutions in Ethiopia," Economic Systems, Elsevier, Elsevier, vol. 32(3), pages 239-252, September.
  8. Mohammad Ismail Hossain & Wim Verbeke, 2010. "Evaluation of Rice Markets Integration in Bangladesh," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 77-96, Jul-Dec.
  9. Kindie Getnet, 2009. "Optimising the policy cost of market stabilisation: Which commodity matters most in Ethiopia?," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(3), pages 362-378.

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