Myanmar Rice Market: Market Integration and Price Causality
In Myanmar, rice is an invaluable commodity both as a staple food and a source of high foreign exchange earnings through export. The countryâ€™s agricultural economy has been transitioning from a planned economy to a market system since the late 1980s; however, the government has yet to engage in full-scale rice export deregulation. Therefore, Myanmarâ€™s rice marketing system works within the boundaries and limitations of a halfway-liberalized economy, inevitably eliciting questions about its performance. Using the Engle and Granger two-step co-integration method and the restructured Ravallion model of unrestricted vector auto-regression (VAR) error correction form, three surplus markets, three deficit markets, and Thai rice price series were tested to determine market integration and price causality. All price series were monthly data in both nominal and real values from 2001 to 2004. Results revealed that in the domestic market, integration was weak in real value of rice price, and the supply side eventually depended on the demand side. Price co-integration did not exist between Myanmar and Thai rice prices in real value, reflecting market segmentation. Consequently, accurate price information from international rice market price over time was unavailable for Myanmar rice price movement. Looking at the direction of rice price causality, deficit market prices were driving the consumer price index (CPI), and the CPI was forcing the surplus rice market price. Hence, deficit markets are the prime movers in rice price changes in Myanmar. Market integration suggests that the government should focus on managing inflationary pressure instead of being directly involved in the rice marketing sector in order to control the domestic rice price stability in the long run. Government monopoly in rice export has caused segmentation between domestic and international markets. If private rice export was permitted via trade policies, the marketing system would be able to transfer correct price signals from the world market to the producers, consumers, market participants, and finally, the government. Only then will Myanmarâ€™s rice market not be isolated from the international market and get the right price co-integration that may push the efficient market-oriented economy to move faster.
Volume (Year): 7 (2010)
Issue (Month): 2 (December)
|Contact details of provider:|| Postal: College 4031, Laguna, Philippines|
Phone: (63-49) 536-2365
Fax: (63-49) 536-7097
Web page: http://www.searca.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alexander, Carol & John Wyeth, 1995. "Seasonal price movements and unit roots in Indonesian rice market integration," Discussion Papers in Economics 01/95, Department of Economics, University of Sussex.
- Engle, Robert & Granger, Clive, 2015.
"Co-integration and error correction: Representation, estimation, and testing,"
Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-276, March.
- James G. MacKinnon, 1990.
"Critical Values for Cointegration Tests,"
1227, Queen's University, Department of Economics.
- Tom Doan, "undated". "EGTEST: RATS procedure to compute Engle-Granger test for Cointegration," Statistical Software Components RTS00061, Boston College Department of Economics.
- James G. MacKinnon, 2010. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:sag:seajad:v:7:y:2010:i:2:p:91-105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Avril DG. Madrid)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.