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Fractional Integration Analysis and its Implications on Profitability: the Case of the Mackerel Market in the Basque Country

Author

Listed:
  • García Enríquez, Javier
  • Arteche González, Jesús María
  • Murillas Maza, Arantza

Abstract

This paper analyses weekly prices for mackerel landed by the inshore fleet at the ports of the Basque Country in 1995-2008, using new econometric techniques never before applied to the fishing market. The idea is to learn to what extent fishermen can pass on the effects of negative shocks (e.g. fuel price increases) to their ex-vessel prices. This will give an idea of the profitability of the fishery in question. To that end, a cyclical ARFIMA model is adjusted to the series analysed, then the impulse-response function is constructed. Among other things, the behaviour of this function shows that possible increases in production costs are not being passed on to prices, which lowers the profitability of fishing. In view of these results, it is suggested that fishermen need to be able to pass the shocks that they suffer on to prices if the profitability of this fleet is to be assured.

Suggested Citation

  • García Enríquez, Javier & Arteche González, Jesús María & Murillas Maza, Arantza, 2010. "Fractional Integration Analysis and its Implications on Profitability: the Case of the Mackerel Market in the Basque Country," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    • Handle: RePEc:ehu:biltok:5567
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    File URL: https://addi.ehu.es/handle/10810/5567
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    References listed on IDEAS

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    3. repec:ilo:ilowps:319361 is not listed on IDEAS
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    Cited by:

    1. Javier García-Enríquez & Josu Arteche & Arantza Murillas-Maza, 2017. "Testing for substitutability in the mackerel market: a new method using fractional cointegration," Applied Economics, Taylor & Francis Journals, vol. 49(39), pages 3912-3926, August.

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