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Modelling Trends in Food Market Integration: Method and an Application to Tanzanian Maize Markets

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  • van Campenhout, Bjorn

Abstract

Pushed by increasing availability of price data and extensive market liberalisation efforts in many developing countries, research on food market integration has evolved rapidly over the last two decades. Empirical methods to measure market integration diverged in two directions: on the one hand, there is the Parity Bounds Model (PBM), while on the other hand the use of Threshold Autoregressive (TAR) Models has been proposed. This article provides a discussion of the two methods and argues that TAR models are more able to capture the dynamics of the arbitrage process underlying interconnected markets. Furthermore, we extend the standard TAR model to include a time trend in both the threshold and the adjustment parameter. Using weekly maize price data on seven selected markets in Tanzania, we illustrate how both transaction cost and the speed of adjustment have changed during the nineties.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24718.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24718

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Keywords: market integration; transaction costs; thresholds; maize; Tanzania; Agribusiness; F15; O18;

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Citations

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Cited by:
  1. Ricker-Gilbert, Jacob & Mason, Nicole M. & Darko, Francis & Jayne, Thomas S. & Tembo, Solomon, 2013. "What are the Effects of Input Subsidies on Maize Prices? Evidence from Malawi and Zambia," Food Security Collaborative Working Papers 154938, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  2. Sanogo, Issa & Maliki Amadou, Mahamane, 2010. "Rice market integration and food security in Nepal: The role of cross-border trade with India," Food Policy, Elsevier, vol. 35(4), pages 312-322, August.
  3. Santeramo, Fabio G. & Cioffi, Antonio, 2010. "Spatial price dynamics in the EU F&V sector: the cases of tomato and cauliflower," 116th Seminar, October 27-30, 2010, Parma, Italy 95228, European Association of Agricultural Economists.
  4. Kelbore, Zerihun Getachew, 2013. "Transmission of World Food Prices to Domestic Market: The Ethiopian Case," MPRA Paper 49712, University Library of Munich, Germany.
  5. Kleemann, Linda, 2013. "Knowing where organic markets move next: An analysis of developing countries in the pineapple market," Economics Discussion Papers 2013-10, Kiel Institute for the World Economy.
  6. Tschirley, David L. & Jayne, Thomas S., 2008. "Food Crises and Food Markets: Implications for Emergency Response in Southern Africa," Food Security International Development Working Papers 54559, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  7. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.
  8. Sekhar, C.S.C., 2012. "Agricultural market integration in India: An analysis of select commodities," Food Policy, Elsevier, vol. 37(3), pages 309-322.
  9. Varela, Gonzalo & Aldaz-Carroll, Enrique & Iacovone, Leonardo, 2012. "Determinants of market integration and price transmission in Indonesia," Policy Research Working Paper Series 6098, The World Bank.
  10. Minot, Nicholas, 2011. "Transmission of world food price changes to markets in Sub-Saharan Africa:," IFPRI discussion papers 1059, International Food Policy Research Institute (IFPRI).
  11. Amikuzuno, Joseph & Ogundari, Kolawole, 2012. "The Contribution of Agricultural Economics to Price transmission Analysis and Market Policy in Sub-Sahara Africa: What Does the Literature Say?," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134754, Agricultural Economics Society.
  12. Perakis, Sonja Melissa, 2012. "“Changing Spatial Maize Price Relationships in West Africa”," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124910, Agricultural and Applied Economics Association.
  13. David Chilosi & Oliver Volckart, 2009. "Money, states and empire: financial integration cycles and institutional change in Central Europe, 1400-1520," Economic History Working Papers 27884, London School of Economics and Political Science, Department of Economic History.
  14. Ihle, Rico & von Cramon-Taubadel, Stephan, 2008. "A Comparison of Threshold Cointegration and Markov-Switching Vector Error Correction Models in Price Transmission Analysis," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37603, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  15. Ricker-Gilbert, Jacob & Mason, Nicole & Jayne, Thomas & Darko, Francis Addeah & Tembo, Solomon, 2013. "What are the effects of input subsidy programs on equilibrium maize prices? Evidence from Malawi and Zambia," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149259, Agricultural and Applied Economics Association.
  16. Myers, Robert J., 2013. "Evaluating the effectiveness of inter-regional trade and storage in Malawi’s private sector maize markets," Food Policy, Elsevier, vol. 41(C), pages 75-84.

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