IDEAS home Printed from
   My bibliography  Save this paper

Transmission of World Commodity Prices to Domestic Commodity Prices in India and China


  • Katsushi Imai
  • Raghav Gaiha
  • Ganesh Thapa


This paper examines the extent to which changes in global agricultural commodity price are transmitted to domestic prices in India and China. The focus is on short and medium-run adjustment processes using an error correction specification. In particular, we show that the extent of adjustment in the short and medium- run (from 0 to 3 years) is generally larger in China than in India. Second, the adjustment is larger for wheat, maize and rice than for fruits and vegetables in both India and China. In fact, the adjustment is the weakest for vegetables in both countries. Third, while most of the domestic commodity prices co-move with global prices, the transmission is incomplete presumably because of distortionary government interventions (e.g. subsidies for agricultural commodities) and failure to exploit spatial arbitrage. So potential benefits to farmers of higher food prices –especially in India-may be restricted, as also the supply response.

Suggested Citation

  • Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2008. "Transmission of World Commodity Prices to Domestic Commodity Prices in India and China," Brooks World Poverty Institute Working Paper Series 4508, BWPI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:4508

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    2. Guinnane Timothy W., 2005. "Trust: A Concept Too Many," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 46(1), pages 77-92, June.
    3. Lazzarini, S. G. & Madalozzo, R. C & Artes, R. & Siqueira, J. O., 2004. "Measuring trust: An experiment in Brazil," Insper Working Papers wpe_42, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    4. Bellemare, Charles & Kröger, Sabine, 2003. "On Representative Trust," SFB 373 Discussion Papers 2003,27, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    5. Schechter, Laura, 2007. "Traditional trust measurement and the risk confound: An experiment in rural Paraguay," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 272-292, February.
    6. Arjan Verschoor & Paul Mosley, 2004. "The Development Of Trust And Social Capital In Rural Uganda: An Experimental Approach," Royal Economic Society Annual Conference 2004 106, Royal Economic Society.
    7. Johansson-Stenman, Olof & Mahmud, Minhaj & Martinsson, Peter, 2013. "Trust, trust games and stated trust: Evidence from rural Bangladesh," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 286-298.
    8. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer;Economic Science Association, vol. 9(3), pages 193-208, September.
    9. Bouma, Jetske & Bulte, Erwin & van Soest, Daan, 2008. "Trust and cooperation: Social capital and community resource management," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 155-166, September.
    10. Håkan J. Holm & Anders Danielson, 2005. "Tropic Trust Versus Nordic Trust: Experimental Evidence From Tanzania And Sweden," Economic Journal, Royal Economic Society, vol. 115(503), pages 505-532, April.
    11. Buchan, Nancy R. & Johnson, Eric J. & Croson, Rachel T.A., 2006. "Let's get personal: An international examination of the influence of communication, culture and social distance on other regarding preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 373-398, July.
    12. R. Quentin Grafton & Stephen Knowles, 2002. "Social Capital and National Environmental Performance: A Cross-sectional Analysis," Economics and Environment Network Working Papers 0206, Australian National University, Economics and Environment Network.
    13. Bohnet, Iris & Croson, Rachel, 2004. "Trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 443-445, December.
    14. Abigail Barr, 2003. "Trust and expected trustworthiness: experimental evidence from zimbabwean villages," Economic Journal, Royal Economic Society, vol. 113(489), pages 614-630, July.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Imai, Katsushi S. & Gaiha, Raghav & Thapa, Ganesh, 2011. "Supply response to changes in agricultural commodity prices in Asian countries," Journal of Asian Economics, Elsevier, vol. 22(1), pages 61-75, February.
    2. repec:oup:apecpp:v:39:y:2017:i:3:p:479-498. is not listed on IDEAS
    3. Kelbore, Zerihun Getachew, 2013. "Transmission of World Food Prices to Domestic Market: The Ethiopian Case," MPRA Paper 49712, University Library of Munich, Germany.
    4. Tharcisse NKUNZIMANA & François Kayitakire, 2013. "Measuring food price volatility and transmission in West Africa: How important are magnitudes of transmission across cereals and countries?," EcoMod2013 5219, EcoMod.
    5. Huda, Fakir Azmal, 2. "Process Of Global Shocks Transmission To Domestic Food Price Level: Case Of Bangladesh," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(2).
    6. Huang, Jikun & Yang, Jun & Msangi, Siwa & Rozelle, Scott & Weersink, Alfons, 2012. "Global biofuel production and poverty in China," Applied Energy, Elsevier, vol. 98(C), pages 246-255.
    7. Bargawi, H. & Newman, S.A., 2013. "From futures markets to the farm-gate," ISS Working Papers - General Series 50215, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    8. Ferguson, Shon & Gars, Johan, 2016. "Productivity Shocks, International Trade and Import Prices: Evidence from Agriculture," Working Paper Series 1107, Research Institute of Industrial Economics.
    9. Amikuzuno, Joseph & Ogundari, Kolawole, 2012. "The Contribution of Agricultural Economics to Price transmission Analysis and Market Policy in Sub-Sahara Africa: What Does the Literature Say?," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134754, Agricultural Economics Society.
    10. Mofya-Mukuka, Rhoda & Abdulai, Awudu, 2013. "Policy reforms and asymmetric price transmission in the Zambian and Tanzanian coffee markets," Economic Modelling, Elsevier, vol. 35(C), pages 786-795.
    11. Lee , Hyun-Hoon & Park, Cyn-Young, 2013. "International Transmission of Food Prices and Volatilities: A Panel Analysis," ADB Economics Working Paper Series 373, Asian Development Bank.
    12. Ferguson, Shon & Gars, Johan, 2015. "Productivity Shocks, International Trade and Pass-Through: Evidence from Agriculture," 2015 Conference, August 9-14, 2015, Milan, Italy 211646, International Association of Agricultural Economists.
    13. Yan, Shuqin & Ogundari, Kolawole & Cao, Zhengwei & Isoda, Hiroshi & Ito, Shoichi & Saito, Hisamitsu, 2015. "Study on the Contemporary Relationship between International and Domestic Grain Prices in Developing Countries: Focusing on Long Run and Short Run," Japanese Journal of Rural Economics, Agricultural Economics Society of Japan (AESJ), vol. 17.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bwp:bwppap:4508. 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: (Rowena Harding). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.