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Intercommodity price transmission and food price policies: An analysis of Ethiopian cereal markets

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  • Rashid, Shahidur

Abstract

Cereal price variability in Ethiopia has worsened in recent years, and some of the earlier liberalizations are being reversed due to the unacceptable economic and political costs of increased price variability. The challenge now is to achieve price stability in a cost-effective way. This paper examines intercommodity price relationships to assess the relative importance of each of the three major cereals in generating price volatility. Based on the estimates from a dynamic econometric model, the paper concludes that maize is the most significant in exacerbating price variability with respect to the persistence of shocks to itself and the two other cereals. This implies that focusing on maize, instead of wheat, will not only help better stabilize prices but also reduce costs of stabilization. The results are also discussed in the context of ongoing policy discussions.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1079.

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Date of creation: 2011
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Handle: RePEc:fpr:ifprid:1079

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Keywords: Cointegration; common trend; food price stabilization;

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  1. Rashid, Shahidur, 2010. "Staple Food Prices in Ethiopia," Food Security Collaborative Working Papers 58552, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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Cited by:
  1. Minten, Bart & Tamru, Seneshaw & Engida, Ermias & Kuma, Tadesse, 2013. "Ethiopia’s value chains on the move: The case of teff:," ESSP working papers 52, International Food Policy Research Institute (IFPRI).
  2. Baltzer, Kenneth, 2013. "International to domestic price transmission in fourteen developing countries during the 2007-08 food crisis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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