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Analyzing Developing Country Market Integration with Incomplete Price Data Using Cluster Analysis

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  • Ansah, Isaac Gershon
  • 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. In particular, we perform cluster analyses on various 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 Gershon & Gardebroek, Cornelis & Ihle, Rico & Jaleta, Moti, 2014. "Analyzing Developing Country Market Integration with Incomplete Price Data Using Cluster Analysis," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197169, International Agricultural Trade Research Consortium.
  • Handle: RePEc:ags:iats14:197169
    DOI: 10.22004/ag.econ.197169
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    References listed on IDEAS

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    Cited by:

    1. Frank Davenport & Chris Funk, 2015. "Using time series structural characteristics to analyze grain prices in food insecure countries," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 7(5), pages 1055-1070, October.
    2. Wassie, Solomon Bizuayehu & Kusakari, Hitoshi & Sumimoto, Masahiro, 2019. "Seasonality of Staple Food Prices in Ethiopia: Does Warehouse Service Matter?," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 21.

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    Keywords

    Demand and Price Analysis; International Development; Public Economics;
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