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Multiple-regime price transmission between wheat and wheat flour prices in Korea

Author

Listed:
  • Jung Hun HAN

    (Korea Rural Economic Institute, Naju, Korea)

  • Byeong-Il AHN

    (Department of Food and Resource Economics, Korea University, Seoul, Korea)

Abstract

In order to derive the evidence of the asymmetric price transmission, we employed the threshold estimation for the price relationship between the imported wheat and the wheat flour prices. We estimated the exact level of threshold points of the imported wheat price that have different impacts on the Korean wheat flour price. Our empirical estimations proved the main hypothesis of this study, namely, that the impact of input price on output price is stronger at higher levels of the input price. In the sub-sample, which includes data from January 1993 to January 2008, the price transmission effect from the imported wheat to the domestic wheat flour in the Regime 3, in which wheat prices are the highest among our three regimes, is larger than that in the Regime 2. In the whole sample, which includes data from January 1993 to March 2014, the price transmission effect in the Regime 3 is larger than that in the Regime 2, and that of the Regime 2 is larger than that of the Regime 1.

Suggested Citation

  • Jung Hun HAN & Byeong-Il AHN, 2015. "Multiple-regime price transmission between wheat and wheat flour prices in Korea," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(12), pages 552-563.
    • Handle: RePEc:caa:jnlage:v:61:y:2015:i:12:id:47-2015-agricecon
    DOI: 10.17221/47/2015-AGRICECON
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    1. Piotr BORAWSKI & Aneta BELDYCKA-BORAWSKA & James W. DUNN, 2018. "Price volatility of Polish agricultural commodities in the view of the Common Agricultural Policy," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(5), pages 216-226.

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