Economics at your fingertips  

Price Transmission Asymmetries and Nonlinearities in the International Coffee Supply Chain

Jun Lee and Miguel I. Gomez

No 104024, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: We examine two distinct and important dimensions (e.g. symmetry vs. asymmetry and linearity vs. nonlinearity) of price transmission from international to retail coffee prices in France, Germany and the United States. We show that ignoring these two features of the price transmission process may lead to misleading impact assessments resulting from the elimination of International Coffee Agreement (ICA) in 1990. Our results confirm the presence of threshold effects in both periods (ICA and post ICA) in all three countries. Our estimates show that, in the long-run, the speed of adjustment toward equilibrium becomes faster during the post-ICA period in France and Germany. Our results suggest that, for these two countries, changes in international prices did not influence retail prices in the short-run during the ICA period; in contrast, retail prices responded to changes in international prices in the post-ICA period. Our results suggest differences between the two European countries and the United States. Specifically, our results indicate that changes in international prices influence U.S. retail prices in both periods. Nonlinear impulse response analysis indicates that ICA elimination in 1990 increased the speed of adjustment toward the long-run equilibrium, given a shock in international coffee prices. Our results show that ignoring nonlinearities and asymmetries in price transmission may lead to incorrect assessment of the consequences accruing to the elimination of the ICA.

Keywords: Demand and Price Analysis; International Relations/Trade (search for similar items in EconPapers)
Pages: 37
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) ... ee%20and%20Gomez.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.22004/ag.econ.104024

Access Statistics for this paper

More papers in 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

Page updated 2021-01-16
Handle: RePEc:ags:aaea11:104024