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Price Transmission Analysis For Nicaragua Rice Market

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  • Darbandi, Elham

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.

Suggested Citation

  • Darbandi, Elham, 2018. "Price Transmission Analysis For Nicaragua Rice Market," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 6(1), January.
    • Handle: RePEc:ags:ijfaec:283763
    DOI: 10.22004/ag.econ.283763
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    Cited by:

    1. Arida, Agustina & Masbar, Raja & Majid, M. Shabri Abd. & Indra, I., 2023. "Does vertical asymmetric price transmission exist in the rice markets?," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(1), March.

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