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Measuring spatial transmission of white maize prices between South Africa and Mozambique: An asymmetric error correction model approach

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  • Acosta, Alejandro

Abstract

Over the last decade, Mozambique has experienced drastic increases in food prices, with serious implications for households’ real income. A deeper understanding of how food prices are spatially transmitted from global to domestic markets is thus fundamental for designing policy measures to reduce poverty and food insecurity. This study assesses the spatial transmission of white maize prices between South Africa and Mozambique using an asymmetric error correction model to estimate the speed and symmetry with which prices are being transmitted from the international to the domestic market. The study found that although the transmission of white maize prices from South Africa and Mozambique is cointegrated in the long run, it is not co-integrated in the short run, and that the transmission of these prices is asymmetric depending on whether the international price increases or decreases. The study suggests that some of the barriers that currently constrain a more efficient price transmission are related to the presence of a highly prohibitive import tariff and the structure of a value added tax.

Suggested Citation

  • Acosta, Alejandro, 2012. "Measuring spatial transmission of white maize prices between South Africa and Mozambique: An asymmetric error correction model approach," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 7(1), pages 1-13, October.
    • Handle: RePEc:ags:afjare:156973
    DOI: 10.22004/ag.econ.156973
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    2. Arndt, Channing & Hussain, M. Azhar & Salvucci, Vincenzo & Østerdal, Lars Peter, 2016. "Effects of food price shocks on child malnutrition: The Mozambican experience 2008/2009," Economics & Human Biology, Elsevier, vol. 22(C), pages 1-13.
    3. Heigermoser, Maximilian & Götz, Linde & Svanidze, Miranda, 2018. "Egypt’S Wheat Tenders – A Public Notice Board For Black Sea Grain Notations?," 58th Annual Conference, Kiel, Germany, September 12-14, 2018 275853, German Association of Agricultural Economists (GEWISOLA).
    4. Philly Ramoroka & Chiedza L. Muchopa, 2022. "Inter-commodity Price Transmission between Maize and Wheat in South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 57-63, September.
    5. Ijambo, Bertha Deshimona, 2017. "An econometric analysis of spatial market integration and price formation in the Namibian sheep industry," Research Theses 334744, Collaborative Masters Program in Agricultural and Applied Economics.

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