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Analyzing Developing Country Market Integration using Incomplete Price Data and Cluster Analysis

Author

Listed:
  • Ansah, Isaac
  • Gardebroek, Cornelis
  • Ihle, Rico
  • Jaleta, Moti

Abstract

Recent global food price developments have spurred renewed interest in analyzing integration of local markets to global markets. A popular approach to quantify market integration is cointegration analysis. However, local market price data often has missing values, outliers, or short and incomplete series, making cointegration analysis impossible. Instead of imputing missing data, this paper proposes cluster analysis as an alternative methodological approach for analyzing market integration. We perform cluster analyses on statistical indicators of eight Ethiopian local price series to analyze how they relate to world market prices. Moreover, recognizing several policy regimes in the period 2007-2010 we investigate how market clusters change over time. Results show that in periods with wheat imports via the private sector, several local markets are clustered with the world market. In periods with government controlled imports and exchange rate collapse, the characteristics of domestic prices were strongly dissimilar from those of world market prices.

Suggested Citation

  • Ansah, Isaac & Gardebroek, Cornelis & Ihle, Rico & Jaleta, Moti, 2015. "Analyzing Developing Country Market Integration using Incomplete Price Data and Cluster Analysis," 2015 Conference, August 9-14, 2015, Milan, Italy 210954, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae15:210954
    DOI: 10.22004/ag.econ.210954
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    File URL: http://ageconsearch.umn.edu/record/210954/files/Ansah-Analyzing%20Developing%20Country%20Market%20Integration%20using%20Incomplete%20Price%20Data%20and%20Cluster%20Analysis-854.pdf
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    References listed on IDEAS

    as
    1. Dorosh, Paul & Robinson, Sherman & Hashim, Ahmed, 2009. "Economic Implications of Foreign Exchange Rationing in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 18(2), pages 132-132, August.
    2. Bernhard Brümmer & Stephan von Cramon-Taubadel & Sergiy Zorya, 2009. "The impact of market and policy instability on price transmission between wheat and flour in Ukraine," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(2), pages 203-230, June.
    3. Negassa, Asfaw & Jayne, Thomas S., 1998. "Vertical and Spatial Integration of Grain Markets in Ethiopia: Implications for Grain Markets," Food Security Collaborative Working Papers 55598, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Maros Ivanic & Will Martin, 2008. "Implications of higher global food prices for poverty in low‐income countries1," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 405-416, November.
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    10. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    11. Cudjoe, Godsway & Breisinger, Clemens & Diao, Xinshen, 2010. "Local impacts of a global crisis: Food price transmission, consumer welfare and poverty in Ghana," Food Policy, Elsevier, vol. 35(4), pages 294-302, August.
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