IDEAS home Printed from https://ideas.repec.org/a/eee/agecon/v19y1998i3p283-295.html
   My bibliography  Save this article

Government intervention and market integration in Indonesian rice markets

Author

Listed:
  • Ismet, Mohammad
  • Barkley, Andrew P.
  • Llewelyn, Richard V.

Abstract

Long‐run spatial price relationships in Indonesian rice markets and factors affecting the degree of market integration are evaluated using multivariate cointegration tests with weekly price data for the 1982‐1993 period. The analysis includes evaluation of pre‐self‐sufficiency and post‐self‐sufficiency periods as well as Cot the entire period. The cointegration tests for entire Indonesian rice market, represented by the nine most relevant price series, indicate that relative to the pre‐self‐sufficiency period, the post‐self‐sufficiency period has a smaller degree of market integration. The change of the degree of market integration over time indicates that rationalizing of the Indonesian rice price policy beyond 1984 rice self‐sufficiency has resulted in a less integrated market. This suggests that the policy shift has allowed the government to decrease its intervention without significantly decreasing market integration, indicating that the private sector is responding to price signals appropriately. It is possible that further reduction in intervention through widening the band between the floor and ceiling price could be accomplished without greatly affecting market integration. Regression results show that government intervention in terms of rice procurement significantly influenced market integration during the period of post‐self‐sufficiency (1985‐1993) and the entire period of 1982‐1993. This indicates that this aspect of government intervention has had positive influences on market integration, in contrast to distribution efforts, which were not found to be statistically significant, Procurement prices may be high, and could perhaps be lowered, reducing program costs. Regional per capita income is also found to be positively related to highei levels of market integration, suggesting that in periods of economic growth, government intervention may be decreased, thereby reducing program costs.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ismet, Mohammad & Barkley, Andrew P. & Llewelyn, Richard V., 1998. "Government intervention and market integration in Indonesian rice markets," Agricultural Economics, Blackwell, vol. 19(3), pages 283-295, December.
    • Handle: RePEc:eee:agecon:v:19:y:1998:i:3:p:283-295
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0169-5150(98)00056-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-472, August.
    3. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    4. Bob Baulch, 1997. "Transfer Costs, Spatial Arbitrage, and Testing for Food Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 477-487.
    5. Gary W. Brester & Barry K. Goodwin, 1993. "Vertical and Horizontal Price Linkages and Market Concentration in the U.S. Wheat Milling Industry," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 507-519.
    6. Dickey, David A & Rossana, Robert J, 1994. "Cointegrated Time Series: A Guide to Estimation and Hypothesis Testing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(3), pages 325-353, August.
    7. David A. Dickey & Dennis W. Jansen & Daniel L. Thornton, 1994. "A Primer on Cointegration with an Application to Money and Income," Palgrave Macmillan Books, in: B. Bhaskara Rao (ed.), Cointegration, chapter 2, pages 9-45, Palgrave Macmillan.
    8. David M. Prescott & Thanasis Stengos, 1987. "Bootstrapping Confidence Intervals: An Application to Forecasting the Supply of Pork," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 266-273.
    9. Barry K. Goodwin & Ted C. Schroeder, 1990. "Testing Perfect Spatial Market Integration: An Application to Regional U.S. Cattle Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 12(2), pages 173-186.
    10. Timmer, C. Peter, 1974. "A Model of Rice Marketing Margins in Indonesia," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 13(2), pages 1-24.
    11. Petzel, Todd E. & Monke, Eric A., 1980. "The Integration of the International Rice Market," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 17(3), pages 1-20.
    12. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    13. Barry K. Goodwin, 1992. "Multivariate Cointegration Tests and the Law of One Price in International Wheat Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 14(1), pages 117-124.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marks, Daan, 2010. "Unity or diversity? On the integration and efficiency of rice markets in Indonesia, c. 1920-2006," Explorations in Economic History, Elsevier, vol. 47(3), pages 310-324, July.
    2. Brosig, Stephan & Yahshilikov, Yorbol, 2005. "Interregional integration of wheat markets in Kazakhstan [Interregionale Integration von Weizenmärkten in Kasachstan]," IAMO Discussion Papers 88, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    3. Chen, Jing & Rozelle, Scott & Carter, Colin A., 1999. "Grain Price Stability And Farmer Decision Making In China," 1999 Annual meeting, August 8-11, Nashville, TN 21538, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Rashid, Shahidur & Gulati, Ashok & Cummings, Jr., Ralph, 2008. "Grain marketing parastatals in Asia: Why do they have to change now?," IFPRI book chapters, in: Rashid, Shahidur & Gulati, Ashok & Cummings, Jr., Ralph (ed.), From parastatals to private trade: Lessons from Asian agriculture, chapter 2, pages 10-47, International Food Policy Research Institute (IFPRI).
    5. Satya Laksana & Arie Damayanti, 2013. "Determinants of the Adoption of System of Rice Intesification in Tasikmalaya District, West Java Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 201306, Department of Economics, Padjadjaran University, revised Mar 2013.
    6. Guoren Long & Xiaoyan Zhou & Jun Li, 2024. "Land Tenure, Loans, and Farmers’ Cropland Conservation Behavior: Evidence from Rural Northwest China," Land, MDPI, vol. 13(4), pages 1-20, March.
    7. Varela, Gonzalo & Aldaz-Carroll, Enrique & Iacovone, Leonardo, 2012. "Determinants of market integration and price transmission in Indonesia," Policy Research Working Paper Series 6098, The World Bank.
    8. Getnet, Kindie, 2008. "From market liberalization to market development: The need for market institutions in Ethiopia," Economic Systems, Elsevier, vol. 32(3), pages 239-252, September.
    9. Tsiboe, Francis & Dixon, Bruce L. & Wailes, Eric J., 2016. "Spatial dynamics and determinants of Liberian rice market integration," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(3).
    10. Boffa,Mauro & Varela,Gonzalo J., 2019. "Integration and Price Transmission in Key Food Commodity Markets in India," Policy Research Working Paper Series 8755, The World Bank.
    11. Madhusudan Ghosh, 2010. "Spatial Price Linkages in Regional Food Grain Markets in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(4), pages 495-516, November.
    12. Suharno, S., 2018. "Spatial Market Integration and Price Transmission of Meat in Indonesia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277371, International Association of Agricultural Economists.
    13. 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.
    14. Kabbiri, Ronald & Dora, Manoj & Elepu, Gabriel & Gellynck, Xavier, 2016. "A Global Perspective of Food Market Integration: A Review," International Journal of Agricultural Sciences and Technology (IJAGST), SvedbergOpen, vol. 55(1-2), May.
    15. Rashid, Shahidur & Cummings, Ralph Jr. & Gulati, Ashok, 2005. "Grain marketing parastatals in Asia," MTID discussion papers 80, International Food Policy Research Institute (IFPRI).
    16. Mu, Y., 2018. "Pork price transmission and efficiency in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277387, International Association of Agricultural Economists.
    17. Koffi-Tessio, Egnonto M. & Sedzro, Kossi & Tossou, Kokou A. & Yovo, Koffi, 2008. "Structure, Coûts Des Transactions Et Integration Spatiale Des Marches Des Produits Alimentaires Au Togo," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 52187, African Association of Agricultural Economists (AAAE).
    18. Varela, Gonzalo J., 2012. "Incomplete, slow, and asymmetric price transmission in ten product markets of Bolivia," Policy Research Working Paper Series 6291, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marks, Daan, 2010. "Unity or diversity? On the integration and efficiency of rice markets in Indonesia, c. 1920-2006," Explorations in Economic History, Elsevier, vol. 47(3), pages 310-324, July.
    2. Carone, Giuseppe, 1996. "Modeling the U.S. demand for imports through cointegration and error correction," Journal of Policy Modeling, Elsevier, vol. 18(1), pages 1-48, February.
    3. Choudhry, Taufiq, 2005. "Exchange rate volatility and the United States exports: evidence from Canada and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 19(1), pages 51-71, March.
    4. Choudhry, T., 1998. "Another visit to the Cagan model of money demand: the latest Russian experience," Journal of International Money and Finance, Elsevier, vol. 17(2), pages 355-376, April.
    5. Choudhry, Taufiq, 1996. "Real stock prices and the long-run money demand function: evidence from Canada and the USA," Journal of International Money and Finance, Elsevier, vol. 15(1), pages 1-17, February.
    6. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.
    7. Levent KORAP, 2008. "Exchange Rate Determination Of Tl/Us$:A Co-Integration Approach," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 7(1), pages 24-50, May.
    8. Kühl, Michael, 2007. "Cointegration in the foreign exchange market and market efficiency since the introduction of the Euro: Evidence based on bivariate cointegration analyses," University of Göttingen Working Papers in Economics 68, University of Goettingen, Department of Economics.
    9. Mallory Mindy & Lence Sergio H., 2012. "Testing for Cointegration in the Presence of Moving Average Errors," Journal of Time Series Econometrics, De Gruyter, vol. 4(2), pages 1-68, November.
    10. Abdul Qayyum, 2000. "Demand for Real Money Balances by the Business Sector: An Econometric Investigation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 857-873.
    11. Djunaidi, Harjanto & Young, Kenneth B. & Wailes, Eric J. & Hoffman, Linwood A. & Childs, Nathan W., 2001. "Spatial Pricing Efficiency: The Case Of U.S. Long Grain Rice," 2001 Annual meeting, August 5-8, Chicago, IL 20457, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Alexander Schätz, 2010. "Macroeconomic Effects on Emerging Market Sector Indices," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 9(2), pages 131-169, August.
    13. Yavapolkul, Navin & Gopinath, Munisamy & Gulati, Ashok, 2004. "Post-Uruguay Round price linkages between developed and developing countries," MTID discussion papers 76, International Food Policy Research Institute (IFPRI).
    14. Madhusudan Ghosh, 2010. "Spatial Price Linkages in Regional Food Grain Markets in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(4), pages 495-516, November.
    15. Richard Heaney, 1998. "A Test of the cost‐of‐carry relationship using the London Metal Exchange lead contract," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 18(2), pages 177-200, April.
    16. Brosig, Stephan & Yakhshilikov, Yorbol, 2005. "Interregional Integration Of Wheat Markets In Kazakhstan," IAMO Discussion Papers 14921, Institute of Agricultural Development in Transition Economies (IAMO).
    17. Phylaktis, Kate, 1997. "Capital market integration in the Pacific-Basin region: An analysis of real interest rate linkages," Pacific-Basin Finance Journal, Elsevier, vol. 5(2), pages 195-213, June.
    18. Phylaktis, Kate, 1999. "Capital market integration in the Pacific Basin region: an impulse response analysis," Journal of International Money and Finance, Elsevier, vol. 18(2), pages 267-287, February.
    19. Baker, Mindy Lyn, 2009. "Three essays concerning agriculture and energy," ISU General Staff Papers 200901010800001849, Iowa State University, Department of Economics.
    20. Norman J. Morin, 2006. "Likelihood ratio tests on cointegrating vectors, disequilibrium adjustment vectors, and their orthogonal complements," Finance and Economics Discussion Series 2006-21, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agecon:v:19:y:1998:i:3:p:283-295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.blackwell-synergy.com/loi/agec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.