Price shock transmission
- This study assesses the degree of vertical price transmission along the wheat-bread value chain in Ethiopia. This is pursued by applying a vector error correction model and an impulse response analysis using monthly price data for the period 2000-2015. Our analysis considers transmission of price shocks across different market levels, including from the international and domestic wheat grain markets at the upstream to the domestic wheat bread market at the downstream of the value chain. The empirical findings indicate that significant cointegration exists across prices of the different market stages. There is a transmission from international prices to domestic prices at downstream markets, in particular to flour and bread prices. Prices at upstream markets are largely influenced by the domestic wholesale market. In general, the speed of adjustment is quite slow with a half-life of about one year for restoring the equilibrium price relationship. As price margins between the different market stages in the value chain have substantiallyThis study assesses the degree of vertical price transmission along the wheat-bread value chain in Ethiopia. This is pursued by applying a vector error correction model and an impulse response analysis using monthly price data for the period 2000-2015. Our analysis considers transmission of price shocks across different market levels, including from the international and domestic wheat grain markets at the upstream to the domestic wheat bread market at the downstream of the value chain. The empirical findings indicate that significant cointegration exists across prices of the different market stages. There is a transmission from international prices to domestic prices at downstream markets, in particular to flour and bread prices. Prices at upstream markets are largely influenced by the domestic wholesale market. In general, the speed of adjustment is quite slow with a half-life of about one year for restoring the equilibrium price relationship. As price margins between the different market stages in the value chain have substantially decreased in the last 15 years, higher transmission, and thus exposure to international market shocks, can be expected in the future. The results also show that causal relationships exist between prices at different market stageswith the wholesale market identified as the key market level where prices and price expectations are formed.…
Author details: | Mekbib Gebretsadik HaileGND, Matthias KalkuhlORCiDGND, Bernardina AlgieriGND, Samuel Gebreselassie |
---|---|
DOI: | https://doi.org/10.1111/agec.12373 |
ISSN: | 0169-5150 |
ISSN: | 1574-0862 |
Title of parent work (English): | Agricultural economics |
Subtitle (English): | evidence from the wheat-bread market value chain in Ethiopia |
Publisher: | Wiley |
Place of publishing: | Hoboken |
Publication type: | Article |
Language: | English |
Date of first publication: | 2017/10/26 |
Publication year: | 2017 |
Release date: | 2021/02/09 |
Tag: | Ethiopia; Impulse response; L11; M31; Price transmission; Q02; Q11; Q13; Value chain; Wheat |
Volume: | 48 |
Issue: | 6 |
Number of pages: | 12 |
First page: | 769 |
Last Page: | 780 |
Funding institution: | European Commission via the FOODSECURE research project; Federal Ministry for Economic Cooperation and Development of Germany (BMZ) |
Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften |
DDC classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Peer review: | Referiert |