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Evaluation of Rice Markets Integration in Bangladesh

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Author Info

  • Mohammad Ismail Hossain

    ()
    (Department of Agricultural Economics, Faculty of Agriculture, Aristotle University of Thessaloniki, Greece.)

  • Wim Verbeke

    ()
    (Department of Agricultural Economics, Faculty of Bioscience Engineering, Ghent University, Belgium.)

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    Abstract

    The liberalization of the agricultural sector in general and the rice subsector in particular has been a major component of Bangladesh’s structural adjustment program initiated in 1992. However, the government has continued to intervene in the rice subsector. This paper examines whether the regional/divisional rice markets have become spatially integrated following the liberalization of the rice market. Wholesale weekly coarse rice prices at six divisional levels over the period of January 2004 to November 2006 were used to test the degree of market integration in Bangladesh using co-integration analysis and a vector error correction model (VECM). The Johansen co-integration test indicated that there are at least three co-integrating vectors implying that rice markets in Bangladesh during the study period are moderately linked together and therefore the long-run equilibrium is stable. The short-run market integration as measured by the magnitude of market interdependence and the speed of price transmission between the divisional markets has been weak.

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    Bibliographic Info

    Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

    Volume (Year): 15 (2010)
    Issue (Month): 2 (Jul-Dec)
    Pages: 77-96

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    Handle: RePEc:lje:journl:v:15:y:2010:i:2:p:77-96

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    Related research

    Keywords: Market liberalization; integration; vector error correction model; rice; price transmission; Bangladesh.;

    References

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    Cited by:
    1. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.

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