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Price Transmission in Conflict-Affected States: Evidence from Cereal Markets of Somalia

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  • Hastings, Justin V.
  • Phillips, Sarah
  • Ubilava, David
  • Vasnev, Andrey

Abstract

How integrated are agricultural markets in conflict-affected states? We answer this question by examining the dynamics of monthly price series of rice, maize, and sorghum across eleven cities (markets) of Somalia. Using conflict as a source of transaction costs between spatially connected markets, we examine its role in price transmission between the markets in a panel smooth transition regression framework. We find that in the case of rice—an imported cereal grain—conflict tends to mitigate the speed of price transmission between markets. By contrast, we find no evidence of conflict-related transaction costs in the case of maize and sorghum—commodities that are locally produced, particularly in the central and southern parts of Somalia. In all instances, we find that there is some degree of spatial integration among cereal markets around the country, perhaps partly due to informal institutions that can bridge the divides created by conflict, distance, and internal political fragmentation. These findings add crucial detail to the literature concerned with the role of commodity prices on poverty and food security in conflict-affected states.

Suggested Citation

  • Hastings, Justin V. & Phillips, Sarah & Ubilava, David & Vasnev, Andrey, 2020. "Price Transmission in Conflict-Affected States: Evidence from Cereal Markets of Somalia," Working Papers 2020-16, University of Sydney, School of Economics.
    • Handle: RePEc:syd:wpaper:2020-16
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    Cited by:

    1. Song, Chun & Scognamillo, Antonio & Mastrorillo, Marina, 2023. "The geographical disparity of climate security: climatic shocks, crop market and conflict in Northern Nigeria," 2023 Annual Meeting, July 23-25, Washington D.C. 335532, Agricultural and Applied Economics Association.
    2. David Ubilava & Justin V. Hastings & Kadir Atalay, 2023. "Agricultural windfalls and the seasonality of political violence in Africa," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1309-1332, October.
    3. Kwon, Daye & Liverpool-Tasie, Saweda & Reardon, Thomas A., 2023. "Market Channel and Heterogeneous Storage Behavior in response to Multiple Risks: The Case of Nigerian Maize Traders," 2023 Annual Meeting, July 23-25, Washington D.C. 335810, Agricultural and Applied Economics Association.
    4. Shon Ferguson & David Ubilava, 2022. "Global commodity market disruption and the fallout," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 737-752, October.
    5. Hussein, Mohamud & Law, Cherry & Fraser, Iain, 2021. "An analysis of food demand in a fragile and insecure country: Somalia as a case study," Food Policy, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    cereal prices; market integration; panel smooth transition regression; price transmission; Somalia;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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