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Devaluation and Cattle Markets Integration in Burkina Faso

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  • Claudio ARAUJO

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Catherine ARAUJO BONJEAN

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Jean-Louis COMBES

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Pascale COMBES MOTEL

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

The aim of this paper is to highlight an aspect of devaluation that is generally ignored in the literature, namely, its positive impact on domestic trade. We develop a parity bounds model for cattle markets of Burkina Faso with two regimes of prices, autarkic and integrated, consistent with spatial and inter-temporal arbitrage conditions. When markets are autarkic, prices follow a random walk and when markets are integrated, prices are equal up to transaction costs. The integrated regime is more likely when transaction costs are low. In our model, the 1994 franc CFA devaluation reduces transaction costs relatively to cattle prices, thereby promoting markets integration. The model is tested using a switching regression with exogenous selection variables. The results show that the probability of market integration significantly increased after the devaluation.

Suggested Citation

  • Claudio ARAUJO & Catherine ARAUJO BONJEAN & Jean-Louis COMBES & Pascale COMBES MOTEL, 2001. "Devaluation and Cattle Markets Integration in Burkina Faso," Working Papers 200114, CERDI.
    • Handle: RePEc:cdi:wpaper:162
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    References listed on IDEAS

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    Cited by:

    1. Somlanare Romuald KINDA & Félix BADOLO, 2014. "Climatic Variability and Food Security in Developing Countries," Working Papers 201405, CERDI.
    2. Félix BADOLO, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," Working Papers 201129, CERDI.
    3. Félix Badolo, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," Working Papers halshs-00627189, HAL.
    4. Félix Badolo, 2011. "Transmission des chocs de prix internationaux : le cas du riz au Burkina Faso," CERDI Working papers halshs-00627189, HAL.
    5. Van Campenhout, Bjorn, 2007. "Modelling trends in food market integration: Method and an application to Tanzanian maize markets," Food Policy, Elsevier, vol. 32(1), pages 112-127, February.
    6. Badolo, Félix, 2012. "Chocs de prix internationaux et transmission : cas du marché du riz au Burkina Faso," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(3), pages 317-346, Septembre.
    7. Somlanare Romuald Kinda, 2016. "Climatic shocks and food security: The role of foreign aid," Working Papers hal-01260846, HAL.

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