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Weather Shocks and Spatial Market Efficiency: Evidence from Mozambique

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  • César Salazar
  • Hailemariam Ayalew
  • Peter Fisker

Abstract

The aim of this paper is to study the association between weather shocks (droughts and floods) and agricultural market performance in Mozambique. To do so, we employ a dyadic regression analysis on monthly maize prices, transport costs, and spatial identification of markets as well as droughts and flooded areas. Our estimates show that, while a drought reduces price differences between markets, price dispersion increases during flood periods, an effect that is mainly driven by increases in transport costs. Finally, floods are found to affect price differences more if markets are closer to each other and if the road infrastructure quality is poor. An important implication of our results is that markets show some degree of efficiency during supply shock periods in Mozambique. However, spatial market integration continues to be insufficient, probably due to high transfer costs.

Suggested Citation

  • César Salazar & Hailemariam Ayalew & Peter Fisker, 2019. "Weather Shocks and Spatial Market Efficiency: Evidence from Mozambique," Journal of Development Studies, Taylor & Francis Journals, vol. 55(9), pages 1967-1982, September.
    • Handle: RePEc:taf:jdevst:v:55:y:2019:i:9:p:1967-1982
    DOI: 10.1080/00220388.2018.1528352
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    Cited by:

    1. Tumpale Sakijege & Francis Dakyaga, 2023. "Going beyond generalisation: perspective on the persistence of urban floods in Dar es Salaam," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 115(3), pages 1909-1926, February.
    2. Chelanga, Philemon & Jensen, Nathaniel & Muendo, Kavoi Mutuku, 2022. "Pastoral livestock market integration amidst improvements in physical and communication infrastructure: Evidence from northern Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(4), December.
    3. César Salazar-Espinoza & Sam Jones, 2017. "The impact of infrastructure shocks on agricultural markets: Evidence from the Zambezi river in Mozambique," WIDER Working Paper Series wp-2017-191, World Institute for Development Economic Research (UNU-WIDER).
    4. César Salazar & Sam Jones, 2017. "The impact of infrastructure shocks on agricultural markets: Evidence from the Zambezi river in Mozambique," WIDER Working Paper Series 191, World Institute for Development Economic Research (UNU-WIDER).
    5. César Salazar & Andrés Acuña‐Duarte & José Maria Gil, 2023. "Drought shocks and price adjustments in local food markets in Chile: Do product quality and marketing channel matter?," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 349-363, May.

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