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Is a public regulation of food price volatility feasible in Africa? An arch approach in Kenya

  • Elodie Maître d'Hôtel

    ()

    (MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Institut national de la recherche agronomique (INRA) - Institut de recherche pour le développement [IRD] - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - IAMM)

  • Tristan Le Cotty

    ()

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - AgroParisTech)

  • Thomas Jayne

    (MSU - Michigan State University - Michigan State University)

The 2007-2008 food crisis and current food price swings led economists to re-evaluate the potential for policy instruments to manage food price volatility. Many developing countries recently pursued price regulation policies, but the difficulties of these policies in promoting price stability is not fully understood. In particular, the ability of a stabilization policy to lower food price volatility does not depend on the nature of the policy instrument only, but also on the institutional conditions of its implementation. Kenya is a particularly interesting case as it is characterized by a rather long tradition of public intervention, and by the persistence of highly volatile prices. The consistency of the policy use appears to be key factor influencing the degree of price volatility. Applied to trade policies, this consistency is defined by the temporal relationship between the tariff level and the international price changes. To test the influence of policy consistency on price volatility, we develop an autoregressive conditionally heteroskedastic model of price determination in which prices and prices volatility are jointly estimated, using monthly data over the 1994-2009 period in Kenya.

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Date of creation: 23 Feb 2012
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Handle: RePEc:hal:journl:hal-00801361
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  1. Angus Deaton & Guy Laroque, 1990. "On The Behavior of Commodity Prices," NBER Working Papers 3439, National Bureau of Economic Research, Inc.
  2. Shaun K. Roache, 2010. "What Explains the Rise in Food Price Volatility?," IMF Working Papers 10/129, International Monetary Fund.
  3. Jayne, Thomas S. & Yamano, Takashi & Nyoro, James K. & Awuor, Tom, 2001. "Do Farmers Really Benefit from High Food Prices? Balancing Rural Interest in Kenya's Maize Pricing and Marketing Policy," Food Security Collaborative Working Papers 55149, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
  5. Christopher Gilbert & Wyn Morgan, 2010. "Has food price volatility risen?," Department of Economics Working Papers 1002, Department of Economics, University of Trento, Italia.
  6. Jayne, Thomas S. & Tschirley, David L., 2009. "Food Price Spikes and Strategic Interactions between the Public and Private Sectors: Market Failures or Governance Failures," Food Security Collaborative Working Papers 97142, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  7. Byerlee, Derek & Jayne, T.S. & Myers, Robert J., 2006. "Managing food price risks and instability in a liberalizing market environment: Overview and policy options," Food Policy, Elsevier, vol. 31(4), pages 275-287, August.
  8. Chapoto, Antony & Jayne, Thomas S., 2009. "The Impacts of Trade Barriers and Market Interventions on Maize Price Predictability: Evidence from Eastern and Southern Africa," Food Security International Development Working Papers 56798, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  9. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399.
  10. Mwanaumo, Anthony & Jayne, Thomas S. & Zulu, Ballard & Shawa, Julius J. & Mbozi, Green & Haggblade, Steven & Nyembe, Misheck, 2005. "Zambia's 2005 Maize Import and Marketing Experiences: Lessons and Implications," Food Security Collaborative Policy Briefs 54615, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  11. Tschirley, David L. & Jayne, T.S., 2010. "Exploring the Logic Behind Southern Africa's Food Crises," World Development, Elsevier, vol. 38(1), pages 76-87, January.
  12. Nijhoff, Jan J. & Jayne, Thomas S. & Mwiinga, Billy & Shaffer, James D., 2002. "Markets Need Predictable Government Actions to Function Effectively: The Case of Importing Maize in Times of Deficit," Food Security Collaborative Policy Briefs 54609, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  13. Ariga, Joshua & Jayne, Thomas S. & Njukia, Stephen, 2010. "Staple food prices in Kenya," Food Security Collaborative Working Papers 58559, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  14. Jian Yang & Michael Haigh & David Leatham, 2001. "Agricultural liberalization policy and commodity price volatility: a GARCH application," Applied Economics Letters, Taylor & Francis Journals, vol. 8(9), pages 593-598.
  15. Poulton, Colin & Kydd, Jonathan & Wiggins, Steve & Dorward, Andrew, 2006. "State intervention for food price stabilisation in Africa: Can it work?," Food Policy, Elsevier, vol. 31(4), pages 342-356, August.
  16. T. S. Jayne & Robert J. Myers & James Nyoro, 2008. "The effects of NCPB marketing policies on maize market prices in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 38(3), pages 313-325, 05.
  17. Barrett, Christopher B., 1997. "Liberalization and food price distributions: ARCH-M evidence from Madagascar," Food Policy, Elsevier, vol. 22(2), pages 155-173, April.
  18. Gerald E. Shively, 1996. "Food Price Variability and Economic Reform: An ARCH Approach for Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 126-136.
  19. Balcombe, Kelvin, 2009. "The Nature and Determinants of Volatility in Agricultural Prices," MPRA Paper 24819, University Library of Munich, Germany.
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