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The Transmission of World Maize Price to South African Maize Market: A Threshold Cointegration Approach

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  • Abidoye, Babatunde O.
  • Marlene, Labuschagne

Abstract

This paper seeks to provide an explanation for the relationship between domestic maize price in South Africa and world maize prices in order to evaluate co-movement and transmission of world prices to domestic prices in Sub-Sahara African countries. This is done by comparing nested and non-nested models that capture di erent forms of nonlinearity in the price spread. Adopting a Bayesian approach that allows for comparison of models using Bayes Factor, we found that the relationship between South African price and world price for maize indicates the presence of nonlinearity in price transmission with three regimes that is triggered by the price spread in previous period.

Suggested Citation

  • Abidoye, Babatunde O. & Marlene, Labuschagne, 2012. "The Transmission of World Maize Price to South African Maize Market: A Threshold Cointegration Approach," Working Papers 206515, University of Pretoria, Department of Agricultural Economics, Extension and Rural Development.
    • Handle: RePEc:ags:upaewp:206515
    DOI: 10.22004/ag.econ.206515
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    Cited by:

    1. Kirsten, Johann F., 2012. "The Political Economy of Food Price Policy in South Africa," Working Papers 206514, University of Pretoria, Department of Agricultural Economics, Extension and Rural Development.
    2. Kirsten, Johann F., 2012. "The Political Economy of Food Price Policy in South Africa," Working Papers 206514, University of Pretoria, Department of Agricultural Economics, Extension and Rural Development.

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