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Milk Market Integration between Hungary and Poland

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  • Bakucs, Lajos Zoltan
  • Falkowski, Jan
  • Ferto, Imre

Abstract

In this paper we test the retail milk price integration between two countries, Poland and Hungary. Conventional linear cointegration methods do not reveal any relationship between the two prices, therefore we apply Gonzalo and Pitakaris (2006) method to test the linear cointegration null against the threshold cointegration with an exogenous threshold variable alternative hypothesis. Our results show, that the Hungarian Forint – Polish Zloty exchange rate is econometrically an appropriate threshold variable, the linearity null is rejected, and the two alternative regimes may be characterised with different long-run equilibrium relationships. Corresponding trade data however questions the economic appropriateness of the selected threshold variable. Further research is needed to analyse the actual effective milk trade flows between the two countries, subject to exchange rate variations.

Suggested Citation

  • Bakucs, Lajos Zoltan & Falkowski, Jan & Ferto, Imre, 2010. "Milk Market Integration between Hungary and Poland," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91809, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc10:91809
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    References listed on IDEAS

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    1. Goetz, Linde & von Cramon-Taubadel, Stephan, 2008. "Considering threshold effects in the long-run equilibrium in a vector error correction model: An application to the German apple market," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44247, European Association of Agricultural Economists.
    2. Bakucs, Lajos Zoltan & Ferto, Imre, 2007. "Spatial Integration On The Hungarian Milk Market," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7832, European Association of Agricultural Economists.
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    Keywords

    horizontal integration; milk market; threshold cointegration; Food Security and Poverty;

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