PRICE TRANSMISSION ANALYSIS FOR NICARAGUA RICE MARKET

Elham Darbandi

International Journal of Food and Agricultural Economics (IJFAEC), 2018, vol. 06, issue 01

Abstract: Rice is the most important staple food for Nicaraguans. Analyzing price linkages among market levels is helpful for policy makers to evaluate the potential impacts of agricultural policy on producers and consumers, especially for a country such as Nicaragua which bases its economy largely on the agricultural sector. This paper analyzes pricing relationship between wholesale and retail levels of Nicaraguan rice market and tests for asymmetric price transmission. Rice and in general agricultural sector has an important role in Nicaragua economic. We used monthly prices for high quality rice data from January 2008 to January 2015 along with a model that is based on the Ward’s model framework. We estimate the model using the autoregressive distributed lag (ARDL) approach. To check the stability of the longrun coefficient, the cumulative sum of recursive residuals (CUSUM) is applied. Also to test the direction of causality, the Granger causality test is used to judge the causality results and different lags have been applied. The results indicate that there is a bilateral relation between wholesale and retail prices. Based on our results, there is significant evidence to support asymmetry between the wholesale and retail sector, which indicates market inefficiency and distortion between these two markets.

Keywords: Agricultural and Food Policy; Agricultural Finance; Community/Rural/Urban Development; Crop Production/Industries; Demand and Price Analysis (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijfaec:283763

DOI: 10.22004/ag.econ.283763

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