Distance and border effects on price transmission - a meta-analysis
Carolin Mengel and
Stephan von Cramon-Taubadel
Authors registered in the RePEc Author Service: Carolin Kouyaté
No 170988, GlobalFood Discussion Papers from Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development
Abstract:
In a meta-analysis of spatial price transmission (PT) literature we aim to test for the presence of distance and border effects on price transmission. We use PT estimates for 1189 cereal market pairs extracted from 57 studies and seek to explain them by airline distance and existence of a border. The findings indicate distance and border effects on both price cointegration and price transmission. A border separating two markets reduces the probability of cointegration of price series by 23% compared with markets located in the same country. 1000 kilometers of distance reduces the probability of cointegration by 7%. The speed of price adjustment is on average 13% slower in international than in intra-national market pairs. 1000 kilometers of distance within a country on average yields 6-20% slower price adjustment. Distance effects become negligible and economically insignificant for international market pairs. Maize price pairs are less often cointegrated compared to rice prices and cointegration is most prevalent for barley. Price transmission is slowest in wheat markets. In peer reviewed studies cointegration is more prevalent and price transmission is faster. However the explanation need not be a publication bias but can also result from higher quality methodologies. Moreover, we identify a set of model specifications that significantly affect price transmission estimates. The study contributes to the literature by presenting a first meta-analysis of spatial PT literature and providing insights into distance and border effects on price transmission.
Keywords: Demand and Price Analysis; International Relations/Trade (search for similar items in EconPapers)
Pages: 23
Date: 2014-05
New Economics Papers: this item is included in nep-agr and nep-int
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Citations: View citations in EconPapers (4)
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Related works:
Journal Article: Distance and Border Effects on Price Transmission: A Meta-analysis (2016) 
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gagfdp:170988
DOI: 10.22004/ag.econ.170988
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