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International market and domestic fragrant rice markets integration in Pakistan: Evidence from quantile cointegration analysis

Author

Listed:
  • Holmes, Mark
  • Valera, Harold Glenn
  • Pede, Valerien
  • Balié, Jean

Abstract

We study the relationship between export prices and domestic fragrant basmati rice markets in Pakistan over the period 2009 to 2022, combining monthly price data from five locations and six international references rice markets. Unlike previous studies, we use a quantile cointegration model to study market cointegration between the international and domestic rice markets. We find that cointegration is less likely when domestic prices are relatively low. In this, we argue that higher domestic prices will serve to motivate arbitrage thereby making domestic prices sensitive to export prices. Furthermore, we find evidence of inelastic relationship in which domestic prices seem insensitive to export prices. The results further suggest that if cointegration is more likely at the higher quantiles, then there might be an increase in sensivity, though an inelastic relationship remains.

Suggested Citation

  • Holmes, Mark & Valera, Harold Glenn & Pede, Valerien & Balié, Jean, 2023. "International market and domestic fragrant rice markets integration in Pakistan: Evidence from quantile cointegration analysis," MPRA Paper 123724, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:123724
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    References listed on IDEAS

    as
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    4. Gerald Shively & Ganesh Thapa, 2017. "Markets, Transportation Infrastructure, and Food Prices in Nepal," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 660-682, April.
    5. Burhan Ahmad & Ole Gjølberg, 2015. "Are Pakistan’s Rice Markets Integrated Domestically and With the International Markets?," SAGE Open, , vol. 5(3), pages 21582440155, July.
    6. Nelissa Jamora & Stephan Cramon-Taubadel, 2016. "Transaction Cost Thresholds in International Rice Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 292-307, June.
    7. Mohammad Jahangir Alam & Andrew M. McKenzie & Ismat Ara Begum & Jeroen Buysse & Eric J. Wailes & Md. Abdur Rouf Sarkar & Abdullah Al Mamun & Guido Huylenbroeck, 2022. "Spatial market integration of rice in Bangladesh in the presence of transaction cost," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-21, December.
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    9. Mohammad Ismail Hossain & Wim Verbeke, 2010. "Evaluation of Rice Markets Integration in Bangladesh," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(2), pages 77-96, Jul-Dec.
    10. Giraud, Georges, 2013. "The World Market of Fragrant Rice, Main Issues and Perspectives," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 16(2), pages 1-20, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Rice markets; Cointegration; Quantile regression; Pakistan;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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