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Are grain markets in Niger driven by speculation?

Author

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  • Catherine Araujo Bonjean

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Catherine Simonet

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract

Over the last two decades, millet prices in Niger have experienced several periods of spectacular increases during which they seemed to go well above their fundamental value. The presence of rational speculative bubbles might explain these episodes of price booms followed by rapid reversals. Relying on the present value model of commodity pricing we test for the presence of periodically and partially collapsing price bubbles for 31 millet markets in Niger by using right-tailed recursive unit root tests. Once controlled for observed fundamentals, one-third of price series manifest explosive behaviour akin to a bubble. Under the rational bubble hypothesis, the results indicate that the traders operating in separate geographic areas differ with respect to information quality. A competing interpretation is that some large traders use their market power to charge higher prices to consumers.

Suggested Citation

  • Catherine Araujo Bonjean & Catherine Simonet, 2016. "Are grain markets in Niger driven by speculation?," Post-Print hal-01687417, HAL.
    • Handle: RePEc:hal:journl:hal-01687417
    DOI: 10.1093/oep/gpw012
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    Cited by:

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    2. Christophe Muller & Nouréini Sayouti, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty ? Evidence from Niger," Working Papers halshs-03097641, HAL.
    3. Philippe Delacote & Julia Girard & Antoine Leblois, 2019. "Agricultural households' adaptation to weather shocks in Sub-Saharan Africa: What implications for land-use change and deforestation," Working Papers 1902, Chaire Economie du climat.
    4. Christophe Muller, 2022. "Poverty Measurement under Income and Price Dispersions," AMSE Working Papers 2204, Aix-Marseille School of Economics, France.
    5. Tiia‐Maria Pasanen & Miikka Voutilainen & Jouni Helske & Harri Högmander, 2022. "A Bayesian spatio‐temporal analysis of markets during the Finnish 1860s famine," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 71(5), pages 1282-1302, November.
    6. Nouréini Sayouti & Christophe Muller, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty ? Evidence from Niger," CERDI Working papers hal-03117686, HAL.
    7. Bouali Guesmi & Ahmed Yangui & Ibtissem Taghouti & José Maria Gil, 2022. "Trade-Off between Land Use Pattern and Technical Efficiency Performance: Evidence from Arable Crop Farming in Tunisia," Land, MDPI, vol. 12(1), pages 1-13, December.

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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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