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The Effect of NFA Buffer Stocks on the Retail Price of Rice in the Philippines

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  • Cuevas, Agham C.

Abstract

The study uses a Vector Error Correction model to show that a long run relationship/ causality exists between NFA stocks and world price and domestic retail price of rice in the Philippines. No short run relationship was found for NFA stocks and retail price while a short run relationship exists for world price and retail price. This implies that while NFA stocks can affect retail prices, a significant amount of time may occur before its effects are transmitted. An Autoregressive Distributed Lag-Error Correction model was also utilized. Results establish a strong short-run relationship between retail prices, total stocks, and world prices. Policywise, this result points to the importance of total supply management implying the need for proper timing in the purchase and release of NFA stocks for it to be effective in stabilizing prices

Suggested Citation

  • Cuevas, Agham C., 2019. "The Effect of NFA Buffer Stocks on the Retail Price of Rice in the Philippines," Journal of Economics, Management & Agricultural Development, Journal of Economics, Management & Agricultural Development (JEMAD), vol. 5(1), June.
    • Handle: RePEc:ags:pjemad:309430
    DOI: 10.22004/ag.econ.309430
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    References listed on IDEAS

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    2. Dawe, David C. & Moya, Piedad F. & Casiwan, Cheryll B. & Cabling, Jesusa M., 2008. "Rice marketing systems in the Philippines and Thailand: Do large numbers of competitive traders ensure good performance?," Food Policy, Elsevier, vol. 33(5), pages 455-463, October.
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    4. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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