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Asymmetric price transmission in the Slovak liquid milk market

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  • T. Weldesenbet

    (Agricultural Policy and Budget Section, Ministry of Agriculture and Rural Development of the Slovak Republic, Bratislava, Slovak Republic)

Abstract

The divergence in liquid milk price trends has raised concern about the efficiency of the milk market price transmission in Slovakia. The paper provides empirical evidence on the price transmission among the producer, wholesale, and retail markets of liquid milk in Slovakia, using the monthly data from 1993 to 2010. The empirical analysis is based on the Granger causality and the Johansen cointegration tests and on the asymmetry tests (Houck approach and error correction model approach). The causality test results show that the changes in producer prices cause changes in the wholesale and retail prices; there is a feedback from the retail to producer prices. Moreover, the direction of causality between the wholesale and retail prices flows in both directions. The long-run elasticities of price transmission are, as expected, greater than the short-run elasticities. The cointegration results indicate that the wholesale and producer prices as well as the retail and producer prices are cointegrated, but there is no evidence of cointegration between the wholesale and retail prices. The results of an asymmetric error correction models suggest that the price transmission in the Slovakian liquid milk market is asymmetric both in the short- and long-runs.

Suggested Citation

  • T. Weldesenbet, 2013. "Asymmetric price transmission in the Slovak liquid milk market," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(11), pages 512-524.
    • Handle: RePEc:caa:jnlage:v:59:y:2013:i:11:id:150-2012-agricecon
    DOI: 10.17221/150/2012-AGRICECON
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    Cited by:

    1. Piotr Borawski & Marta Guth & Wojciech Truszkowski & Dagmara Zuzek & Aneta Beldycka-Borawska & Bartosz Mickiewicz & Elzbieta Szymanska & Jayson Kennedy Harper & James William Dunn, 2020. "Milk price changes in Poland in the context of the Common Agricultural Policy," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(1), pages 19-26.
    2. Piotr Bórawski & Marta Guth & Andrzej Parzonko & Tomasz Rokicki & Aleksandra Perkowska & James William Dunn, 2021. "Price volatility of milk and dairy products in Poland after accession to the EU," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(3), pages 111-119.

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