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Is a public regulation of food price volatility feasible in Africa? An arch approach in Kenya

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  • Elodie Maître D'Hôtel

    ()
    (MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD : UMR99 - IRD - IAMM - Institut national de la recherche agronomique (INRA) : UR1110)

  • Tristan Le Cotty

    ()
    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD : UMR56 - CNRS : UMR8568 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - AgroParisTech)

  • Thomas Jayne

    (MSU - Michigan State University - Michigan State University)

Abstract

The 2007-2008 food crisis and current food price swings led economists to re-evaluate the potential for policy instruments to manage food price volatility. Many developing countries recently pursued price regulation policies, but the difficulties of these policies in promoting price stability is not fully understood. In particular, the ability of a stabilization policy to lower food price volatility does not depend on the nature of the policy instrument only, but also on the institutional conditions of its implementation. Kenya is a particularly interesting case as it is characterized by a rather long tradition of public intervention, and by the persistence of highly volatile prices. The consistency of the policy use appears to be key factor influencing the degree of price volatility. Applied to trade policies, this consistency is defined by the temporal relationship between the tariff level and the international price changes. To test the influence of policy consistency on price volatility, we develop an autoregressive conditionally heteroskedastic model of price determination in which prices and prices volatility are jointly estimated, using monthly data over the 1994-2009 period in Kenya.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number hal-00801361.

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Date of creation: 24 Feb 2012
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Publication status: Published - Presented, PRICE VOLATILITY AND FARM INCOME STABILISATION Modelling Outcomes and Assessing Market and Policy Based Responses, 2012, Dublin, Ireland
Handle: RePEc:hal:journl:hal-00801361

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Keywords: volatility; predictability; consistency; food price; policy; Kenya;

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  4. Tschirley, David L. & Jayne, T.S., 2010. "Exploring the Logic Behind Southern Africa's Food Crises," World Development, Elsevier, Elsevier, vol. 38(1), pages 76-87, January.
  5. Mwanaumo, Anthony & Jayne, Thomas S. & Zulu, Ballard & Shawa, Julius J. & Mbozi, Green & Haggblade, Steven & Nyembe, Misheck, 2005. "Zambia's 2005 Maize Import and Marketing Experiences: Lessons and Implications," Food Security Collaborative Policy Briefs, Michigan State University, Department of Agricultural, Food, and Resource Economics 54615, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  6. Jayne, Thomas S. & Yamano, Takashi & Nyoro, James K. & Awuor, Tom, 2000. "Do Farmers Really Benefit from High Food Prices? Balancing Rural Interests in Kenya's Maize Pricing and Marketing Policy," Food Security Collaborative Policy Briefs, Michigan State University, Department of Agricultural, Food, and Resource Economics 54641, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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  8. Poulton, Colin & Kydd, Jonathan & Wiggins, Steve & Dorward, Andrew, 2006. "State intervention for food price stabilisation in Africa: Can it work?," Food Policy, Elsevier, Elsevier, vol. 31(4), pages 342-356, August.
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  11. Chapoto, Antony & Jayne, Thomas S., 2009. "The Impacts of Trade Barriers and Market Interventions on Maize Price Predictability: Evidence from Eastern and Southern Africa," Food Security International Development Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 56798, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  12. Jayne, Thomas S. & Tschirley, David L., 2009. "Food Price Spikes and Strategic Interactions between the Public and Private Sectors: Market Failures or Governance Failures," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 97142, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  13. Byerlee, Derek & Jayne, T.S. & Myers, Robert J., 2006. "Managing food price risks and instability in a liberalizing market environment: Overview and policy options," Food Policy, Elsevier, Elsevier, vol. 31(4), pages 275-287, August.
  14. Gerald E. Shively, 1996. "Food Price Variability and Economic Reform: An ARCH Approach for Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 78(1), pages 126-136.
  15. Christopher Gilbert & Wyn Morgan, 2010. "Has food price volatility risen?," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 1002, Department of Economics, University of Trento, Italia.
  16. Ariga, Joshua & Jayne, Thomas S. & Njukia, Stephen, 2010. "Staple food prices in Kenya," Food Security Collaborative Working Papers, Michigan State University, Department of Agricultural, Food, and Resource Economics 58559, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  17. Balcombe, Kelvin, 2009. "The Nature and Determinants of Volatility in Agricultural Prices," MPRA Paper 24819, University Library of Munich, Germany.
  18. Nijhoff, Jan J. & Jayne, Thomas S. & Mwiinga, Billy & Shaffer, James D., 2002. "Markets Need Predictable Government Actions to Function Effectively: The Case of Importing Maize in Times of Deficit," Food Security Collaborative Policy Briefs, Michigan State University, Department of Agricultural, Food, and Resource Economics 54609, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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