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Intercommodity price transmittal : analysis offood markets in Ghana

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  • Alderman, Harold

Abstract

This report expands on a dynamic model of market integration to investigate how information is transmitted across commodities. The author investigates one property of an efficient market : the full use of available information. Studies of spatial price integration simultaneously looks at the flow of information and commodities. The author investigates the flow of information within a single spatial market and the relationship between prices in spatially separate markets. He studies intercommodity price transmittal from two perspectives. First, he asks whether the government can concentrate on a single commodity price, yet achieve policy objectives in a broader arena. This is important in Ghana because no single commodity dominates consumers'food budgets. The author finds that price movements for the main cereal consumed in the country (maize) are fully transmitted to other regions. Second, he investigates the working of commodity markets in developing countries. He notes imperfections in the way markets process information. There are several possible explanations for this market inefficiency. Traders may set prices for other coarse grains in response to information about maize prices. Another possibility is that some traders may not deal in all grains and thus have different costs of acquiring information. In short the author's dynamic model of price integration indicates functional efficiency in Ghana.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 884.

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Date of creation: 30 Apr 1992
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Handle: RePEc:wbk:wbrwps:884

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Keywords: Access to Markets; Markets and Market Access; Environmental Economics&Policies; Economic Theory&Research; Agricultural Research;

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  1. G. William Schwert, 1988. "Tests For Unit Roots: A Monte Carlo Investigation," NBER Technical Working Papers 0073, National Bureau of Economic Research, Inc.
  2. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  3. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-28, August.
  4. Heytens, Paul J., 1986. "Testing Market Integration," Food Research Institute Studies, Stanford University, Food Research Institute, issue 01.
  5. Durbin, J, 1970. "Testing for Serial Correlation in Least-Squares Regression When Some of the Regressors are Lagged Dependent Variables," Econometrica, Econometric Society, vol. 38(3), pages 410-21, May.
  6. Hendry, David F. & Pagan, Adrian R. & Sargan, J.Denis, 1984. "Dynamic specification," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 18, pages 1023-1100 Elsevier.
  7. Kling, Catherine L. & Sexton, Richard & Carman, Hoy, 1991. "Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery," Staff General Research Papers 1609, Iowa State University, Department of Economics.
  8. Deaton, Angus S, 1977. "Involuntary Saving through Unanticipated Inflation," American Economic Review, American Economic Association, vol. 67(5), pages 899-910, December.
  9. Harriss, Barbara, 1979. "There is Method in My Madness: Or is it Vice Versa? Measuring Agricultural Market Performance," Food Research Institute Studies, Stanford University, Food Research Institute, issue 02.
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Cited by:
  1. 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.
  2. David Gray, 2005. "An examination of regional interaction and super-regions in Britain: An error correction model approach," Regional Studies, Taylor & Francis Journals, vol. 39(5), pages 619-632.
  3. Van Campenhout, Bjorn, 2007. "Modelling trends in food market integration: Method and an application to Tanzanian maize markets," Food Policy, Elsevier, vol. 32(1), pages 112-127, February.
  4. Abdulai, Awudu, 2000. "Spatial price transmission and asymmetry in the Ghanaian maize market," Journal of Development Economics, Elsevier, vol. 63(2), pages 327-349, December.
  5. Rose FIAMOHE & Bruno HENRY de FRAHAN, 2012. "Transmission Des Prix Et Asymétrie Sur Les Marchés De Produits Vivriers Au Bénin," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 36, pages 205-228.
  6. Badiane, Ousmane & Shively, Gerald E., 1998. "Spatial integration, transport costs, and the response of local prices to policy changes in Ghana," Journal of Development Economics, Elsevier, vol. 56(2), pages 411-431, August.
  7. Rashid, Shahidur, 2011. "Intercommodity price transmission and food price policies: An analysis of Ethiopian cereal markets," ESSP working papers 22, International Food Policy Research Institute (IFPRI).
  8. Alderman, Harold & Shively, Gerald, 1996. "Economic reform and food prices: Evidence from markets in Ghana," World Development, Elsevier, vol. 24(3), pages 521-534, March.
  9. Baffes, John & Ajwad, Mohamed I., 1998. "Detecting price links in the world cotton market," Policy Research Working Paper Series 1944, The World Bank.
  10. Diakosavvas, Dimitris, 1995. "How integrated are world beef markets? The case of Australian and U.S. beef markets," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 12(1), April.
  11. Diakosavvas, Dimitris, 1995. "How integrated are world beef markets? The case of Australian and U.S. beef markets," Agricultural Economics, Blackwell, vol. 12(1), pages 37-53, April.
  12. Shively, Gerald E., 2001. "Price thresholds, price volatility, and the private costs of investment in a developing country grain market," Economic Modelling, Elsevier, vol. 18(3), pages 399-414, August.
  13. Langyintuo, Augustine S., 2010. "Grain price adjustment asymmetry: the case of cowpea in Ghana," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96165, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).

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