A study on spatial market integration and causality: The case of major dry chilli markets in south India

K. M. Suman, Siddayya, G. Ranganath and P. Arpitha

Indian Journal of Agricultural Marketing, 2023, vol. 37, issue 3

Abstract: Market Integration and tendency of causality of major Dry Chilli markets in Southern India is analyzed in the present study. The data pertains Byadagi, Guntur, Warangal and Khammam Markets daily wholesale prices from 1st January 2022 to 31st December 2022 which was collected from agmarknet.gov.in. The ADF test of four wholesale price markets indicated that three out of the 13 possible alternatives to the null hypothesis of non-stationarity may be rejected at levels. However, all price series exhibited their stationarity at the first difference. Therefore, it may be concluded that all the price data were stationary after the first differences. The results also, indicates that out of 13 varieties, 10 varieties were having a trend line. EViews software was used to analyse the integration between the markets and the varieties based on the Johansen's multiple co-integration procedure. The results showed that there were at least eight and seven co-integrating equations, respectively, at the five per cent level of significance in the Unrestricted co-integration rank tests (Trace and Maximum Eigen Value). Out of the 45 pairs tested by the Granger causality test, 16 pairs had unidirectional causality and nine pairs had bidirectional causality, according to the results. Whereas, the other 20 pairs didn't show an causality tendency. Thus, it can be said that chilli prices in the markets of the major producing States had a long-run equilibrium relationship, and the price information feedback mechanism was present on both ends of the markets and in its various varieties.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:injagm:399908

DOI: 10.22004/ag.econ.399908

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