Price Transmission and Market Integration in Oyo State, Nigeria

This paper examines-post-dollarization in Zimbabwe-the extent of price dispersion within Zimbabwe and between Zimbabwe and South Africa. We document the adjustment process, and the mechanisms of price adjustment after the introduction of the new currency system in Zimbabwe. We show that prices converged post-dollarization. We argue that the fall in price dispersion is not a product or a Southern Africa region effect. Rather it is a Zimbabwe specific effect and given that price convergence happens quicker the closer the month is to the dollarization, we argue that the observed results are driven by the change in currency. Price dispersion happens faster between major cities and secondary cities, suggesting improvements in information and trade signals between major and secondary cities. These results suggest that the positive effects of a stable currency fall disproportionally on secondary cities, implying price stability not only has macroeconomic benefits, but also developmental benefits since secondary cities and rural areas are on average, poorer than main cities.

Section: A Brief Review Of Literaturesupporting

confidence: 80%

Price adjustment after hyperinflation in Zimbabwe

Nyawo

Rankin

2020

“…A large number of empirical studies have examined the spatial and vertical price transmissions in Africa using different techniques. Most of the researchers (Abdulai, ; Getnet et al ., ; Tostao and Brorsen, ; Nkendah and Nzouessin, ; Getnet, ; Oladapo and Momoh, ; Amikuzuno and von Cramon‐Taubadel, ; Asche et al ., ) were interested in examining the relationship between central and local food markets. These studies tried to explain why food prices are often lower in local markets compared to urban or central markets and the speed of price transmission among markets.…”

Section: Introductionmentioning

confidence: 99%

Market Integration and Spatial Price Transmission in Niger Grain Markets

Zakari¹,

Liu²,

Song³

2014

This paper investigates price transmission from international and regional markets to Niger domestic grain markets using monthly wholesale prices. Cointegration and error correction models were employed to analyze the degree of price transmission. Tests of causality were also performed. In general, the results showed that grain markets in Niger respond to negative and positive shocks in regional and international markets differently. Maize and rice markets have high speed of adjustments to world prices compared to millet and sorghum markets. The speed of adjustment of prices to the long-run equilibrium varies between 30 percent, 35 percent, 48 percent and 40 percent respectively for millet, sorghum, maize and rice prices. Nigeria, Burkina-Faso, Mali, Togo and Vietnam markets have shown significant transmission in Niger markets. Supply and demand shocks in these markets will definitely affect Niger food prices. Based on this analysis, we suggest that Niger should develop a proper trade policy with its neighboring countries to facilitate regional market integration. This will enable Niger to import cereals from regional surplus-producing areas to supply its food shock regions to reduce the negative impacts of price shocks on households. For rice, Niger should encourage local production to limit high dependence on international markets.

“…In modelling the price transmission, the standard point-space model will be used as our conceptual framework (G omez and K€ orner, 2011;Oladapo and Momoh, 2008). According to this framework, if two markets are interconnected by transport cost and if consumers are indifferent as to the sources of supply, the price level of a given crop in a given market will be determined by local market conditions, spatial market conditions as well as by the cost of transferring the crop between markets.…”

Section: Modelling Price Transmissionmentioning

confidence: 99%

Price Transmission Asymmetry in Spatial Grain Markets in Ethiopia

Wondemu¹

2015

Acknowledging the link between competitive and efficient spatial agricultural markets and farm productivity, the government of Ethiopia has implemented various market enhancing policy and institutional measures. The effectiveness of these measures to achieve their policy goals, among others, depends on the degree of symmetry prices transmit across spatial markets as well as on the efficiency of spatial arbitrage. We tested the presence of asymmetric price adjustment in the spatial grain markets in Ethiopia. The result provided clear evidence of asymmetric price adjustment for teff crops, but not for maize. For teff crops, prices adjust quickly to shocks that increase price than shocks that reduce prices. The analysis on the efficiency of the grain markets also showed that the spatial markets are characterized by a significant level of inefficiency. Although further research is necessary to establish the real causes for the observed asymmetric price transmission and market inefficiency, the finding suggests that departure from perfectly competitive settings are partly to be blamed for the recent food crops price hikes. In addition to their undesirable redistributional consequences, price transmissions asymmetry and inefficiency are expected to entail efficiency loss. Future empirical work in this area should strive to explain the underlying reasons for the observed asymmetric price transmission and market inefficiency.