Ankamah-Yeboah, Isaac (2012): Spatial Price Transmission in the Regional Maize Markets in Ghana.
Preview |
PDF
MPRA_paper_49720.pdf Download (868kB) | Preview |
Abstract
Policy makers have been striving through market reforms to ensure proper functioning of agricultural markets and marketing channels to ensure food security, realize welfare impacts from policies, bridge the gap between the affluent and deprived regions. The core of which is due to regional ecological differences among other factors. In addition, the purported ability of marketing participants to influence the conduct of the market and respond to certain price shocks more faster/slowly than others warrants examining the regional maize market linkages within the past decade. Using regional monthly wholesale price data from 2002 – 2010, the consistent threshold autoregressive model is employed for the study considering the robustness and the limitations of other approaches. Results indicate that regional maize markets are integrated. Bidirectional market interdependence was found between market pairs both in the short and long run. The long run causality was however heterogeneous with respect to positive and negative shocks. The nature of price adjustment is asymmetric and traders respond quickly when market margins are squeezed than when stretched for all market pairs except between Brong Ahafo and Greater Accra market pairings. The time path needed for adjustment ranged from 7 to 26 months. The minimum adjustment time was 7 months occurring between Brong Ahafo - Greater Accra markets linkage for positive deviations and Brong Ahafo - Ashanti market for negative deviations. The recent expansion in communication infrastructure motivates the regional market integration. This implies that resources should be allocated to transportation development; the main hindrance to trade. The suboptimal condition of asymmetry is also motivated by inventory behaviour of traders but this remains a testable hypothesis. Traders in Greater Accra are slow in passing on price increases for the fear of loss of goodwill and/or loss of customer share given the multiple sources of supply.
Item Type: | MPRA Paper |
---|---|
Original Title: | Spatial Price Transmission in the Regional Maize Markets in Ghana |
English Title: | Spatial Price Transmission in the Regional Maize Markets in Ghana |
Language: | English |
Keywords: | Threshold Cointegration, Maize, Ghana, Price Transmission, Time Series |
Subjects: | Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q11 - Aggregate Supply and Demand Analysis ; Prices Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q13 - Agricultural Markets and Marketing ; Cooperatives ; Agribusiness Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy ; Food Policy Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q19 - Other |
Item ID: | 49720 |
Depositing User: | Mr Isaac Ankamah-Yeboah |
Date Deposited: | 11 Sep 2013 11:33 |
Last Modified: | 26 Sep 2019 10:06 |
References: | Abdulai, A. (2000): Spatial Price Transmission and Asymmetry in the Ghanaian Maize Market, Journal of Development Economics Vol. 63, No. 2, pp. 327-349. Abdulai, A. (2007): Spatial and Vertical Price Transmission in Food Staples Market Chains in Eastern and Southern Africa: What is the evidence? Paper presented at the FAO Trade and Markets Division Workshop on Staple Food Trade and Market Policy Options for Promoting Development in Eastern and Southern Africa, Rome, March 1-2. Abunyuwah, I. (2007): Market Integration Analysis and Time Series Econometrics-Conceptual Insights from Markov-Switching Models, Doctoral Dissertation: Faculty of Agricultural Sciences Georg-August-University of Göttingen, Germany. Akiyama, T., Baffes, J., Larson, D. F. and Varangis, P. (2003): Commodity Market Reform in Africa: Some Recent Experience, World Bank Policy Research Working Paper 2995, March. Alderman, H. (1992): Intercommodity Price Transmittal: Analysis of Food Markets In Ghana, Policy Research Working Paper Series 884. The World Bank. Alderman, H. and Shively, G. E. (1991): Prices and Markets in Ghana, Cornell Food and Nutrition Policy Program Working paper No. 10, Ithaca, NY. Alemu, Z. G. and Van Schalkwyk, H. D. (2009): Market Integration in Mozambican Maize Markets, Ethiopia, Ossrea. Al-Hassan, R., Poulton, C. and Dorward, A. (1999): Improving Access to Maize Marketing Opportunities in Remote Areas of Ghana, Paper presented at the workshop on 'Improving Smallholder Market Access in Remote Areas of sub-Saharan Africa', Workshop at Wye College, Kent, UK, 42 pp. Amikuzuno, J. (2009): Spatial Price Transmission and Market Integration between Fresh Tomato Markets in Ghana: Any Benefits from Trade Liberalisation? Tropentag, October 6-8, Hamburg. Amikuzuno, J. (2010): Spatial Price Transmission and Market Integration between Fresh Tomato Markets in Ghana: Any Benefits from Trade Liberalization?, Department of Agricultural Economics and Extension, University for Development Studies, Tamale, Ghana. Centre for the Study of African Economics Conference Economic Development in Africa. Amonde, T., McDonald, L. and Barrett, K. (2009): An Economic Enquiry into the Causes of the Perceived Asymmetric Price Transmission in Markets for Specific Consumer Goods in Jamaica, The Fair Trading Commission (FTC) of Jamaica, April. Armah, P. W. and Asante, F. (2004): Ensuring Food Security in Ghana-The Role of Maize Storage Systems, Seminar paper presented at the Institute of Statistical, Social and Economic Research, August 22. Asuming-Brempong S. and Osei-Asare, Y. (2007): Has Imported Rice Crowded-Out Domestic Rice Production in Ghana? What Has Been The Role Of Policy?, AAAE Conference Proceedings, Accra, Ghana. Badiane, O. and Shively, G. E. (1997): The Response of Local Maize Prices to the 1983 Currency Devaluation in Ghana, MTID Discussion Papers 12, International Food Policy Research Institute (IFPRI). Badiane, O. and Shively, G. E. (1998): Spatial Integration, Transport Costs, and the Response of Local Prices to Policy Changes in Ghana, Journal of Development Economics, Elsevier, vol. 56(2), pages 411-431, August. Badiane, O., Ulimwengu, J. M. and Wouterse, F. (2010): Spatial Price Transmission and Market Integration in Senegal’s Groundnut Market, International Food Policy Research Institute Series Number 1014. Balke, N. S. And Fomby, T. B. (1997): Threshold Cointegration, Int. Econ. Rev. 38, 627-645. Ball, L. and Mankiw, N. G. (1994): Asymmetric Price Adjustment and Economic Fluctuations, The Economic Journal 104 (423), 247–261. Barrett, C. (1996): Market Analysis Methods: Are our Enriched Toolkits Well Suited to Enlivened Markets?, American Journal of Agricultural Economics, vol. 78, 825–9. Barrett, C. B. (2005): Spatial Market Integration”. The New Palgrave Dictionnary of Economics, 2nd Edition, London: Palgrave Macmillan. Barrett, C. B. and Li, J. R. (2002): Distinguishing between Equilibrium and Integration in Spatial Price Analysis, American Journal of Agricultural Economics, 84, 292-307. Baulch, B. (1997): Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration, American Journal of Agricultural Economics, 79:477-487, May. Baum, C. F. (2001): The Language of Choice for Time Series Analysis?, Stata Journal 1: 1-16. Beaulieu, J. and Miron, J. (1993): Seasonal Unit Roots in Aggregate U.S. Data, Journal of Econometrics 55, 305-328. Ben-Kaabia, M., Gil, J. M. and Boshnjaku, L. (2002): Price Transmission Asymmetries in the Spanish Lamb Sector, International Congress, August 28-31, Zaragoza, European Association of Agricultural Economists. Brendstrup, B., Hylleberg, S., Nielsen, M., Skipper, L., and Stentoft, L. (2001): Seasonality in Economic Models, Department of Economics Working Paper 2001-16, University of Aarhus. Canova, F. and Hansen, B. E. (1995): Are Seasonal Patterns Constant over Time? A Test for Seasonal Stability, Journal of Business and Economic Statistics, 13, 237-252. Chan, K. S. (1993): Consistency and Limiting Distribution of the Least Squares Estimator of a Threshold Autoregressive Model, The Annals of Statistics, 21, 520-533. Cirera, X. and Arndt, C. (2006): Measuring the Impact of Road Rehabilitation on Spatial Market Efficiency in Maize Markets in Mozambique, DNEAP Discussion Paper 30E, Ministry of Planning and Development, Mozambique. Clemente, J., Montañés, A. and Reyes, M. (1998): Testing for a Unit Root in Variables with a Double Change in the Mean, Economics Letters, Vol. 59, pp.175-182. Cudjoe, G., Breisinger, C. and Diao, X. (2008): Local Impacts of a Global Crisis: Food Price Transmission and Poverty Impacts In Ghana, International Food Policy Research Institute. Cutts, M. and Kirsten, J. F. (2006): Asymmetric Price Transmission and Market Concentration: An Investigation into Four South African Agro-Food Industries, South African Journal of Economics 74(2): 323-333. Delgado, C. (1986): A Variance Components Approach to Food Grain Market Integration in Northern Nigeria, American Journal of Agricultural Economics 68 (4), 970-979. Egyir, I. S., Al-Hassan, R. and Abakah, J. K. (2011): The Effect of ICT-Based Market Information Services on the Performance of Agricultural Markets: Experiences from Ghana, International Journal of ICT. Res. Dev., 2: 1-13. Enders, W. and C. W. J. Granger (1998): Unit-Root Tests and Asymmetric Adjustment With an Example Using the Term Structure of Interest Rates, Journal of Business and Economic Statistics 16, 304 - 11. Enders, W. and Siklos, P. L. (2001): Cointegration and Threshold Adjustment, Journal of Business and Economic Statistics 19, 166-176. Engle, R. F. and Granger C. W. J. (1987): Cointegration and Error Correction: Representation, Estimation and Testing, Econometrica, 55, 251-276. Engle, R. F. and Yoo, B. S. (1987): Forecasting and Testing in Co-Integrated Systems, Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May. Fackler, P. and Goodwin, B. (2001): Spatial Price Analysis, In handbook of Agricultural Economics, vol. 1B, ed. B. Gardner and G. Rausser, Amsterdam: Elsevier. Falsafian A. and Moghaddasi R. (2008): Spatial Integration and Asymmetric Price Transmission in Selected Iranian Chicken Markets, Paper prepared for presentation at the 12th EAAE Congress ‘People, Food and Environments: Global Trends and European Strategies’, Gent (Belgium), 26-29 August. FASDEP I (2002): Food and Agriculture Sector Development Policy, Ministry of Agriculture, Ghana. FASDEP II (2008): Food and Agriculture Sector Development Policy, Ministry of Agriculture, Ghana. Franses, P. H. (1991): Seasonality, Nonstationarity and the Forecasting Of Monthly Time Series, International Journal of Forecasting 7, 199-208. Gage, D., Bangnikon, J., Abeka-Afari, H., Hanif, C., Addaquay, J., Antwi, V. and Hale, A. (2012): The Market for Maize, Rice, Soy and Warehousing on Northern Ghana, The Enabling Agricultural Trade (EAT) project. Glynn, J., Nelson, P. And Reetu, V. (2007): Unit Root Tests and Structural Breaks: A Survey with Applications, Revista de Metodos Cuntitativos para la Econofa la Empresa, 3, 63-79. Goletti, F., Ahmed, R. and Farid, N. (1995): Structural Determinant of Market Integration: The Case Study of Rice in Bangladesh, The Development Economics, XXXII-2. Gonzalo, J. and Pitarakis, J. (2006): Threshold Effects in Cointegrating Relationships. Oxford Bulletin of Economics and Statistics, Vol. 68, pp. 813-833. Goodwin, B. K. and Piggott, N. E. (1999): Spatial Market Integration in the Presence of Threshold Effects, American Agricultural Economics Association. Goodwin, B. K. And Holt, M. T. (1999): Asymmetric Adjustment and Price Transmission in the US Beef Sector, American Journal of Agricultural Economics 81, 630-637. Goodwin, B. K. and Piggott, N. (2001): Spatial Market Integration in the Presence of Threshold Effects, American Journal of Agricultural Economics, 83:302-17. Goodwin, B. K. and Schroeder, T. C. (1990): Testing Perfect Spatial Market Integration: An Application to Regional United States Cattle Markets, N. Cent. J. Agr. Econ. 12:173-85. Goodwin, B. K. and Schroeder, T. C. (1991): Cointegration Tests and Spatial Price Linkages in Regional Cattle Markets, American Journal of Agricultural Economics 73(2): 452-464. Granger, C. W. J. and Lee, T. H. (1989): Investigation of Production, Sales and Inventory Relationships using Multicointegration and Non-symmetric Error Correction Models, Journal of Applied Econometrics 4, pp. 135- 159. Granger, C. W. J. and Newbold, P. (1974): Spurious Regressions in Econometrics, Journal of Econometrics 2, 111-120. Hassouneh, I., von Cramon-Taubadel, S., Serra, T. and Gil, J. M. (2012): Recent Developments in the Econometric Analysis of Price Transmission, Working Paper No. 2: Transparency of Food Pricing TRANSFOP, January. Heien, D. M. (1980): Markup Pricing in a Dynamic Model of the Food Industry, American Journal of Agricultural Economics 62: 10-18. Hossain, M. I. and Verbeke, W. (2010): Evaluation of Rice Markets Integration in Bangladesh, The Lahore Journal of Economics 15: 2, pp. 77-96. Houck, J. P. (1977): An Approach to Specifying and Estimating Nonreversible Functions, American Journal of Agricultural Economics 59, pp. 570-572. Hylleberg, S. (1995): Tests for Seasonal Unit Roots: General to Specific or Specific to General, Journal of Econometrics 69, 5-25. Hylleberg, S., Engle, R. F., Granger, C. W. J. and Yoo, B. S. (1990): Seasonal Integration and Cointegration, Journal of Econometrics 44, pp. 215-238. Johansen, S. (1988): Statistical Analysis of Cointegration Vectors, Journal of Economic Dynamics and Control, Vol. 12, No. 2–3, pp. 231–254. Johansen, S. and Juselius, K. (1990): Maximum Likelihood Estimation and Inference on Cointegration-with Applications to the Demand for Money, Oxford Bulletin of Economics and Statistics 52, 169-210. Katengeza, S. P. (2009): Malawi Agricultural Commodity Exchange And Spatial Rice Market Integration, Research Theses 117804, Collaborative Masters Program in Agricultural and Applied Economics. Kinnucan, H. W. and Forker, O. D. (1987): Asymmetry in Farm-Retail Price Transmission for Major Dairy Products, American Journal of Agricultural Economics 69:285–292. Kovenock, D. and Widdows, K. (1998): Price leadership and asymmetric price rigidity, European Journal of Political Economy 14 (1), 167-187. Langyintuo, A. S. (2010): Grain Distribution in Ghana under Imperfectly Competitive Market Conditions, AAAE Third Conference/AEASA 48th Conference, September 19-23, Cape Town, South Africa. Loveridge, S. (1991): Marketing in Rwanda-imports and infrastructure, Food Policy 16:95-104. Lumsdaine, R. L. and Papell, D. H. (1997): Multiple Trend Breaks and the Unit Root Hypothesis, Review of Economics and Statistics, 79 (2), pp. 212-218. Manera, M. and Frey, G. (2005): Econometric Models of Asymmetric Price Transmission, Fondazione Eni Enrico Mattei Working Papers 100. McNew, K. and Fackler, P. L. (1997): Testing Market Equilibrium: Is Cointegration Informative?, Journal of Agricultural and Resource Economics Vol 22. December: 191-207. McNew, K. (1996): Spatial market integration: definition, theory and evidence, Agricultural and Resource Economics Review, April. Mensah-Bonsu, A., Agyeiwaa-Afran, A. and Kuwornu, J. K. M. (2011): Efficiency of the plantain marketing system in Ghana: A co-integration analysis, Journal of Development and Agricultural Economics vol. 3(12), pp.593–601, 26 October. Meyer, J. and von Cramon-Taubadel, S. (2004): Asymmetric Price Transmission: A Survey, Journal of Agricultural Economics, vol. 55(3), pages 581-611, Wiley Blackwell. Mockshell, J. And Egyir, I. S. (2010): Assessing the Market Integration of Locally Produced Groundnut in Ghana, Tropentag, September 14-16, Zurich. Morris, M. L., Tripp, R. and Dankyi, A. A. (1999): Adoption and Impacts of Improved Maize Production Technology: A Case Study of the Ghana Grains Development Project, Economics Program Paper 99-01. Mexico, D.F.: CIMMYT. Muyatwa, V. P. (2001): The Liberalization and Integration of Regional Maize Markets in Zambia, Ph.D. thesis, University of Manitoba. Negassa, A. and Myers, R. (2007): Estimating Policy Effects on Spatial Market Efficiency: An Extension to the Parity Bounds Model, American Journal of Agricultural Economics, 89(2). Negassa, A., Meyers, R. and Gabre-Maldhin, E. (2003): Analyzing the Grain Market Efficiency in Developing Countries: Review of Existing Methods and Extensions to the Parity Bound Model, Market trade and institutions division Discussion paper, 63. Nyanteng, V.K. and Asuming-Brempong S. (2003): The Role of Agriculture in the Food Security of Ghana 2003, Paper presented at the “Roles of Agriculture Project, International Conference, 20-23 October. Perron, P. (1989): The Great Crash, The Oil Price Shock, and The Unit Root Hypothesis, Econometrica, 57, pp.1361-1401. Perron, P. (1997): Further Evidence on Breaking Trend Functions in Macroeconomic Variables, Journal of Econometrics, 80 (2), pp.355-385. Rapsomanikis, G. and Karfakis, P. (2007): Margins Across Time and Space: Threshold Cointegration and Spatial Pricing Applications to Commodity Markets in Tanzania, Paper presented in the Workshop on Staple Food Trade and Market Policy Options for Promoting Development in Eastern and Southern Africa, Rome. Rapsomanikis, G., Hallam, D. and Conforti, P. (2004): Market Integration and Price Transmission in Selected Food and Cash Crop Markets of Developing Countries: Review and Applications, Commodity Market Review FAO, Rome. Ravallion, M. (1986): Testing Market Integration, American Journals for Agriculture Economics, 1:102-108. Reagan, P. B. And Weitzman, M. L. (1982): Asymmetries in Price and Quantity Adjustments by the Competitive Firm, Journal of Economic Theory 27, 410-420, August. Sankaran, G., Naillon, J., Nguyen, J., Chang, H. H., Hilde, P. and Chadwick, B. (2011): Telecommunications Industry in Ghana: A Study Tour Analysis, University Of Washington-Bothel. Sanogo, I. (2008): Spatial integration of the rice market: Empirical Evidence from Mid‐West and Far-West Nepal and the Nepalese‐Indian Border, Asian Journal of Agriculture and Development 4(1), 139‐156. Saran, S. and Gangwar, L. S. (2008): Analysis of Spatial Cointegration amongst Major Wholesale Egg Markets in India, Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 21(2), December. Schulze, P. M. (2009): Seasonal Unit Root Tests for the Monthly Container Transshipment of the Port Of Hamburg, Johannes Gutenberg-Universität Mainz Working Paper Number 45, Institute for Statistics and Econometrics. Seo, M. (2006): Bootstrap Testing for the Null of No Cointegration in a Threshold Vector Error Correction Model, Journal of Econometrics 134, 129–150. Sexton, R. J., King, C. L. and Carman, H. F. (1991): Market Integration, Efficiency of Arbitrage, and Imperfect Competition: Methodology and Application to U.S. Celery, American Journal of Agricultural Economics, 73(3): 568-80. Shen, S., Li, G. and Song, H. (2009): Effect of Seasonality Treatment on the Forecasting Performance of Tourism Demand Models, Tourism Economics 15 (4): 693-708. Shively, G. E. (1996): Food Price Variability and Economic Reform: An ARCH Approach for Ghana, American Journal of Agricultural Economics 78 (1), 126–136. Spiller, P. and Huang, C. J. (1986): On the Extent of the Market: Wholesale Gasoline in the North-eastern United States, Journal of Industrial Economics, 35(2) 131-145. Spiller, P. and Wood, R. O. (1988): Transaction Costs in Arbitrage Models, Journal of Econometrics, 39(2) pp.309-326. Timmer, P.C. (1974): A Model of Rice Marketing Margins in Indonesia, Food Research Institute Studies, 12(2): 145-167. Tomek, W. G. And Robinson, K. L. (2003): Agricultural Product Prices, Ithaca, NY: Cornell University Press. Tong, H. (1978): On a Threshold Model in Pattern Recognition and Signal Processing, (Ed.). C. Chena. Amsterdam: Sijhoff and Noonhoff. Tostão E. and Brorsen, B. W. (2005): Spatial Price Efficiency in Mozambique’s Post-Reform Markets, Agricultural Economics, Volume 33. Tsay, R. (1989): Testing and Modelling Threshold Autoregressive Processes, Journal of American Statistics Association 84, 231-240. Tweenten, L. G. and Quance, C. L. (1969): Positivistic Measures of Aggregate Supply Elasticities: Some new Approaches, American Journal of Agricultural Economics 51, pp. 342-352. Uchezuba, I. D., Jooste, A. and Willemse, J. (2010): Measuring Asymmetric Price and Volatility Spillover in the South African Broiler Market, AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa. Van Campenhout, B. (2007): Modeling Trends in Food Market Integration: Method and an Application to Tanzanian Maize Markets, Food Policy, Elsevier, vol. 32(1), pages 112-127, February. Von Cramon-Taubadel, S. (1998): Estimating Asymmetric Price Transmission with the Error Correction Representation: An Application to the German Pork Market, European Review of Agricultural Economics, Vol. 25, pp. 1-18. Von Cramon-Taubadel, S. and Fahlbusch, S. (1994): Identifying Asymmetric Price Transmission with Error Correction models, Poster Session EAAE European Seminar in Reading. Von Cramon-Taubadel, S. and Loy, J. P. (1996): Price Asymmetry in the International Wheat Market: Comment, Canadian Journal of Agricultural Economics 44, pp. 311-317. WABS (2008): Maize Value Chain Study in Ghana: Enhancing Efficiency and Competitiveness, WABS Consulting Ltd. Ward, R. W. (1982): Asymmetry in Retail, Wholesale and Shipping Point Pricing for Fresh Vegetables, American Journal of Agricultural Economics 62, pp. 205-212. Wlazlowski, S., Giulietti, M., Binner, J. and Milas, C. (2009): Price dynamics in European petroleum markets, Energy Economics, 31(1), 99-108. Wolffram, R. (1971): Positivistic Measures of Aggregate Supply Elasticities-Some New Approaches-Some Critical Notes, American Journal of Agricultural Economics 53, pp. 356-356. Zivot, E. and Andrews, K. (1992): Further Evidence on the Great Crash, the Oil Price Shock, and the Unit Root Hypothesis, Journal of Business and Economic Statistics, 10 (10), pp. 251–70. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/49720 |