A global perspective of food market integration: A Review

Markets are important determinants of food availability and accessibility. The extent to which they make food available, accessible and keep prices stable depends on whether or not they are integrated. If markets are well integrated, it is assumed that market forces are working properly. Considering the importance of market integration in the food sector, a lot of research has been done to test integration of food markets. This paper analyses the state of the art research on food market integration, classifies it and poses questions that future research in this field can focus on. A total of 65 published articles on food market integration from all over the world were reviewed. All the reviewed papers were published between 1990 and 2014 in high quality journals. The search for literature was based on the keyword descriptor “food or commodity market integration/price transmission/price volatility” for selected databases and websites for a period ranging from 1990 to 2014. We selected the databases for keywords in titles, abstracts, keywords list and full text. The search produced thousands of papers. We then reviewed the full text of the papers, subject to relevance, in order to select the ones related to this study. Based on relevance and consideration of the time period for this study, we finally obtained 65 articles. We then classified the articles based on year of publication, country and source of study, data sampled, methodology adopted and findings and conclusions of the articles. Findings show that the majority of research has concentrated relatively more on identifying the degree of linkages among the markets but not on its implications. The paper also identified the following factors as very important in increasing/decreasing the degree of market integration: physical infrastructure, market institutions, information, competition, market power, trade, social capital, public/government intervention and export restrictions/ban. Based on these findings the paper recommends future research on food market integration to address these questions. How does the quality of physical infrastructure/roads affect the speed of adjustment of markets in case of a shock? How has popularity of mobile phone use among the farming communities affected the degree of food market integration? How does trust and networking among farmers and traders influence price transmission and market integration? What is the effect of export restrictions on price volatility and price transmission in food markets

Monetary Policy, Global Liquidity and Commodity Price Dynamics

This paper examines the interactions between money, interest rates, goods and commodity prices at a global level. For this purpose, we aggregate data for major OECD countries and follow the Johansen/Juselius cointegrated VAR approach. Our empirical model supports the view that, when controlling for interest rate changes and thus different monetary policy stances, money (defined as a global liquidity aggregate) is still a key factor to determine the long-run homogeneity of commodity prices and goods prices movements. The cointegrated VAR model fits with the data for the analysed period from the 1970s until 2008 very well. Our empirical results appear to be overall robust since they pass inter alia a series of recursive tests and are stable for varying compositions of the commodity indices. The empirical evidence is in line with theoretical considerations. The inclusion of commodity prices helps to identify a significant monetary transmission process from global liquidity to other macro variables such as goods prices. We find further support of the conjecture that monetary aggregates convey useful information about variables such as commodity prices which matter for aggregate demand and thus inflation. Given this clear empirical pattern it appears justified to argue that global liquidity merits attention in the same way as the worldwide level of interest rates received in the recent debate about the world savings and liquidity glut as one of the main drivers of the current financial crisis, if not possibly more

A Further Step into the ELGH and TLGH for Spain and Italy

Nowadays many developing countries focus on economic policies for promoting international tourism and exports expansion as a potential source of economic growth of the country. However, the understanding of the relationship between exports and economic growth is still ongoing. When treating the relationship between tourism and economic growth, considering tourism as a non-traditional export few studies have been published to date. This paper has the objective to assess if exports and tourism have really promoted growth by means of the export-led growth hypothesis (ELGH) and the tourism-led growth hypothesis (TLGH). The cases under analysis are Spain and Italy, two of the most important countries worldwide regarding the expansion of tourism. Cointegration techniques and the multivariate Granger causality test are applied. Results reveal that exports cause economic growth in the long-term for both countries, whilst only for Spain tourism appears as a factor which influences economic growth in the lon-run

China in the Global Economy

China occupies a unique position among developing countries. Its success in achieving relative stability in the financial sector since the institution of reforms in 1979 has given way to relative instability since the beginning of the current global financial crisis. Over the last few years, China has been on a path of capital account opening that has drawn larger inflows of capital from abroad, both foreign-direct and portfolio investment. Of late, a surge in these inflows has introduced problems for the monetary authorities in continuing with an autonomous monetary policy in China, especially with large additions to official reserves, the latter in a bid to avoid further appreciation of the country's domestic currency. Like other developing countries, China today faces the impossible trilemma of managing the exchange rate with near-complete capital mobility and an autonomous monetary policy. Facing problems in devising and sustaining this policy, China has been using expansionary fiscal policy to tackle the impact of shrinking export demand. The recent drive on the part of Chinese authorities to boost real demand in the countryside and to revamp the domestic market shows a promise far different from that of the financial rescue packages in many advanced nations. The close integration of China with the world economy over the last two decades has raised concerns from different quarters that relate both to (1) the possible effects of the recent global downturn on China and (2) the second-round effects of a downturn in China for the rest of world

The Causal Structure of Land Price Determinants

"This paper investigates causation contemporaneously and dynamically to elucidate the persistent lack of agreement about what "causes" changes in farmland prices. The analysis synthesizes and extends previous investigations in this area by employing a combination of directed acyclic graphs (DAG), a recently developed modeling technique, and cointegrated VAR model. DAG theory and algorithms offer a powerful tool for analyzing contemporaneous causal relationships among economic variables. The results from this study confirm the importance of measures of return to farming, financial (credit market constraints) and/or macroeconomic activity as significant determinants of fluctuations in farmland prices." Copyright 2006 Canadian Agricultural Economics Society.