Cointegration and Market Integration: An Application to the Potato Markets in Rural West Bengal, India

The paper attempts to examine the market integration with the help of cointegration test on the prices of potato of Hooghly district in West Bengal. The analysis has been made at two levels, namely at the level of wholesale markets and at the retail markets. The cointegration test by Johansen and Jeselius (1990) applied to weekly prices of three important potato markets in Hooghly district suggest that the markets are integrated. Our results revealed that price signals and information are transmitted smoothly across the markets. These results have important policy implications. In a situation when potato markets are spatially integrated the government may think of reducing or even withdrawing its efforts to influence the price in the market. The finding of the market integration appears to be quite significant for the success of price policy and market liberalisation programs undertaken in India.market integration, cointegration, wholesale potato market, retail potato market, price signal and information., Crop Production/Industries, Marketing, Q13,

Domestic Market Integration

The paper looks into the level of integration of commodity markets in India, across centres and states using consumer price data. It measures the extent to which domestic markets for goods in India are integrated, and recommends policy options to facilitate integration. The paper addresses questions: Are domestic markets for goods integrated across states? Has market integration increased over time? What are the policy options to facilitate integration? The paper tests the methodology proposed by Bradford and Lawrence (2004) on the consumer prices of goods in major states across India. This is then repeated using consumer price data at two points in time (1994 and 2004), allowing an assessment of whether Indian markets have integrated over time. Market integration is also tested for individual commodities across markets. The annual consumer prices for commodities were compiled from the Labour Bureau series of average monthly consumer prices of commodities for Industrial workers across 70 constituent centres in 18 states and monthly data was compiled from the Indian Labour Journal, a monthly publication from Labour Bureau, Ministry of Labour Government of India. Authors are thankful to Labour Bureau, Shimla for providing data on consumer prices at the disaggregated level. This study was commissioned by The World Bank as the background paper on market integration in The World Bank Development Policy Review: Inclusive Growth and Service Delivery: Building on India's Success. July 2006Market Integration, Consumer Prices, Primary Food, Manufactured Goods, India

PRICE INTEGRATION AND TRANSMISSION OF FOOD GRAINS MARKETS IN SOUTHWEST NIGERIA (2004-2013)

The success of market reforms in developing countries depends to a large extent on the strength of price signals transmitted between different level of markets reflecting extent of market integration and extent to which markets function efficiently. Market integration is an indicator that efficiency exists within the flow of information between markets. This study examined price  integration and transmission of food grains markets in Southwest, Nigeria. Time series data of rural and urban retail prices of local and imported rice, cowpea and maize between 2004 to 2013 were obtained from the Agricultural Development Programme (ADP) Offices in selected States. The degree of price transmission was analyzed within the framework of Vector Error Correction Model (VECM). The Augmented Dickey Fuller (ADF) unit root test results revealed that the price series were stationary at first difference.  Johansen cointegration results showed that even though two Cointegrating Equations (CEs) exist between linear combinations, some stable long run equilibrium relationships exist among the price series. The study concluded that  Rural Price of Local Rice in Lagos State (RPLRLS), Rural Price of Cowpea in Oyo State (RPCOYS) and Rural Price of Maize in Lagos State (RPMLS) occupied the leadership position in price formation and transmission. The study therefore, recommended that policy measures aimed at increasing consumption of local rice, cowpea and maize be implemented, in identifying the leader markets.   &nbsp

Analysis of the Competitiveness of the Pork Industry in Denmark

Now days in the pig industry as well as in other agro food sectors is the competitiveness that declare the success or failure on the global market. In the case of the pig industry, to be competitive it means to be able to offer a product of higher quality than rivals, but at similar price. The Danish pig industry has reached this level of competitiveness mainly thanks to its forward vertical integrated production chain. This specific coordination, besides than to reduce the transaction costs, push toward a production of excellent quality, that can be promptly adjusted according to the consumers demand.competitiveness, Danish pork industry, vertical integration, Livestock Production/Industries,

Does price uncertainty really reduce private investment? A small model applied to Chile

Understanding how prices and quantities affect investment demand is important in analyzing adjustment policies in many developing countries. Recent literature emphasizes that uncertainty curtails private investment, adding a risk premium - the price of waiting. Several recent empirical studies have confirmed this result. This new development has been used to challenge one of the most popular policy recommendations derived from the traditional literature on investment: increasing investment by reducing the cost of capital through tax incentives or exchange rate policies. Because such policies are likely to increase uncertainty about the price of capital, their effect on private investment is ambiguous. The popular intuition is that private investors care more about the uncertainty of the price of capital than its level. In other words, incentives would have to be unreasonably high to bolster investments. The authors argue that uncertainty about the cost of capital should be compared with uncertainty about the price of output. Using a simple analytical model, they conclude that the efficiency of policies aimed at reducing the price of capital may be enhanced if: the volatility of the output price is greater than the volatility of the price of capital; and there is a positive correlation between changes in prices for output and capital. In both cases, private investment will be more responsive to changes in the price of capital (or in aggregate demand) because firms will minimize profit fluctuations. They apply this model to Chile for 1980-90. Chile is the reputed"success story"of structural adjustment and has achieved fairly stable growth in the past eight years. (The results correspond to the predictions of the analytical model.)Capital Flows,International Terrorism&Counterterrorism,Trade and Regional Integration,Economic Theory&Research,Environmental Economics&Policies

Exchange Rate Regimes and the Transition Process in the Western Balkans

In the academic literature some criteria have been identified which could have an impact on the success of the transition process, such as macroeconomic stability, microeconomic restructuring and implementation of legal and institutional reforms. The role of the exchange rate system in general is to foster the stability of the monetary environment characterized by low inflation rates and a stable domestic currency. Although the importance of a sustainable price-level oriented monetary policy for the transition-success has been stressed in the academic literature, there are still further questions to be answered related to the choice of the exchange rate system throughout the different phases of the transition process. This paper intends to contribute to close this gap in the literature. The guiding research question is how the choice of an exchange rate system influences the economic success of a country in transition and its gradual integration within the European Union (EU) and the European Monetary Union (EMU). For this purpose, the study focuses on the transition process of South-eastern Europe (SEE). In particular and for the first time in a joint study, we will take a look at the following South-eastern European Countries (SEECs), often referred to as the “West Balkans”: Bosnia and Herzegovina (BiH), Croatia, Former Yugoslav Republic of Macedonia (FYRM), Serbia and Montenegro, as these five countries share certain common characteristics: they were part of the Former Yugoslav Republic (FYR); they are countries in transition; they are members of the Stability Pact for South-eastern Europe and they are all potential EU-accession candidates.Balkans, exchange rate mechanism, optimum currency areas, economic transition, trade integration

Creating Capitalism: Using Growth Models to Assess Transition

Five generic reforms, price liberalization, property privatization, macroeconomic stabilization, microeconomic restructuring and trade liberalization, are integrated into both exogenous and endogenous growth models. This integration allows one to assess the implications of each reform for a representative consumer. If one assumes that in assessing a prospective reform each voter, given his unique characteristics and circumstances, acts as if he were the representative consumer, then this framework allows one to evaluate quantitatively the prospects of each reform for each distinct group. This model can be used to forecast how different voters, young-old, flexible-rigid, working-retired, taxpayer-transfer recipient, will respond to each proposal. This can in turn be used to determine the likelihood of success of a democratic polity in transition to capitalism.transition; reforms; exogenous growth models; endogenous growth models

Macroeconomic Interdependence and Integration in Africa

There is a renewed interest in the debate on integration in Africa since the creation of the Africa Union in 2002. This study investigates the feasibility of a full-fledge union in Africa from an economic standpoint. Towards this goal, we examine both the contemporaneous and dynamic relations in the short- and long-run among six key macro variables--consumer price level, gross domestic product, consumption, investment, trade flows and government expenditures--in eight African countries. In the quarterly data from 1976 to 2005, we observe the existence of common trends in real output, price level, private consumption, government consumption, investment and trade flows among these eight countries. In addition, we also note that there exist common cycles in real output, investment and trade flows for these countries. These two critical findings indicate the existence of some macroeconomic interdependence among these countries. Thus, the chances for success of integration in Africa driven by these eight countries are appreciable

Some empirical evidences on ASEAN 5 fiscal policy regime and monetary and fiscal policy interactions

The interest of common currency among Asian countries have spurred many events happening for the past few years, notably the declaration of Asian Currency Unit in 2006 by Asia Development Bank (ADB). Hence, research papers examining on the integration of monetary policies are abundance. However, paper on examining fiscal policy regime and interaction between monetary and fiscal policy on ASEAN countries, is lacking. The success of monetary union relies on the price stability of member nations. However, joining a monetary union means the lost of monetary policy sovereignty. Therefore, fiscal policy turns to be the next important tool to maintain price stability. This is reflected from the EMU countries after year 1999, where national monetary policies are completely centralized to the European Central Bank (ECB). The European System of Central Banks (ESCB) combines unity of decisions with participation of national central banks in the decision making process and implementation. Nevertheless, national fiscal policies of the member countries are still in the hands of the national governments. This paper intents to examine the type of fiscal policy regime practiced by ASEAN 5 countries. Using macro-economic data for Indonesia, Malaysia, Philippines, Singapore and Thailand, the interrelationship of government surplus/deficits and liabilities is analyzed using Correlation test, Vector Auto-regression (VAR) and Impulse response (IR) function to determine whether a Ricardian or Non-Ricardian fiscal policy has been implemented. Also, comparison of monetary and fiscal policy interactions between some EMU countries and ASEAN 5 are made. The results indicate interactions among inter EMU countries and inter ASEAN countries are generally comparable