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Government Interventions, Market Integration, and Price Risk in Pakistan’s Punjab

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  • Takashi Kurosaki

    (Institute of Developing Economies, Tokyo, Japan.)

Abstract

This paper empirically examines the spatial and intertemporal price relations of grains in Pakistan’s Punjab. The salient feature of the paper is that quantity variables such as market surplus and government release are incorporated in the price arbitrage model to quantify the effects of government interventions. Regression analysis using three-year crosssection data shows that the farm-gate prices of wheat after harvest are mostly explained by the government support price while those of Basmati paddy have more unexplained variation. This difference could be due to a difference in the price support mechanism. Investigation on intertemporal price relations shows that wholesale wheat prices regularly increase at the rate of storage costs in the first half of a food year, and that the price rise is repressed by the government release in the second half only in a normal year.

Suggested Citation

  • Takashi Kurosaki, 1996. "Government Interventions, Market Integration, and Price Risk in Pakistan’s Punjab," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(2), pages 129-144.
    • Handle: RePEc:pid:journl:v:35:y:1996:i:2:p:129-144
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    File URL: http://www.pide.org.pk/pdf/PDR/1996/Volume2/129-144.pdf
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    References listed on IDEAS

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    1. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, January.
    2. Faiz Mohammad, 1985. "Farm Prices and the Green Revolution. Some Reflections on the Performance of Private Agricultural Markets in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 24(2), pages 103-123.
    3. Cornelisse, Peter A. & Naqvi, Syed Nawab Haider, 1989. "An appraisal of wheat market policy in Pakistan," World Development, Elsevier, vol. 17(3), pages 409-419, March.
    4. Martin Ravallion, 1986. "Testing Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 102-109.
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    Cited by:

    1. Rashid, Shahidur & Gulati, Ashok & Cummings, Jr., Ralph, 2008. "Grain marketing parastatals in Asia: Why do they have to change now?," IFPRI book chapters, in: Cummings, Jr., Ralph; Gulati, Ashok; Rashid, Shahidur (ed.), From parastatals to private trade: Lessons from Asian agriculture, chapter 2, pages 10-47, International Food Policy Research Institute (IFPRI).
    2. Ramadas Sendhil & Kashish Arora & Sunny Kumar & Priyanka Lal & Arnab Roy & Ramalingam Jayakumara Varadan & Sivasankar Vedi & Anandan Pouchepparadjou, 2023. "Price Dynamics and Integration in India’s Staple Food Commodities—Evidence from Wholesale and Retail Rice and Wheat Markets," Commodities, MDPI, vol. 2(1), pages 1-21, February.
    3. Sahito, Jam Ghulam Murtaza, 2015. "Market integration of wheat in Pakistan," Discussion Papers 72, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    4. Kurosaki, Takashi & Fafchamps, Marcel, 2002. "Insurance market efficiency and crop choices in Pakistan," Journal of Development Economics, Elsevier, vol. 67(2), pages 419-453, April.
    5. Muhammad Sarwar Zahid & Abdul Qayyum & Wasim Shahid Malik, 2007. "Dynamics of Wheat Market Integration in Northern Punjab, Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 817-830.
    6. Ahmad, Munir & Croraton, Caesar & Qayyum, Abdul & Iqbal, Muhammad & Dorosh, Paul, 2005. "Impact of Domestic Policies towards Agricultural Trade Liberalization and Market Reform on Food Security in Pakistan," MPRA Paper 72932, University Library of Munich, Germany.
    7. Briones Alonso, Elena & Swinnen, Johan, 2016. "Who are the producers and consumers? Value chains and food policy effects in the wheat sector in Pakistan," Food Policy, Elsevier, vol. 61(C), pages 40-58.
    8. 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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