Price transmission with sparse market information: The case of United States chickpeas

Abstract

In this paper, supply‐related and price data for several chickpea importing regions and supply‐related data for export competitor countries were encompassed into price transmission models to determine whether such factors are helpful for explaining the United States chickpea price variation. Specifically, the models included satellite‐based normalized difference vegetation index, a measure of growing conditions, and area planted estimates for importing regions of the Indian subcontinent and the Mediterranean, and area planted estimates for exporting competitors, Australia and Canada. Results show that inclusion of supply‐related information improved goodness of fit statistics in all models relative to base models that only include prices, providing evidence that such information is important for explaining United States chickpea price changes. The models with the highest goodness of fit statistics were those that accounted for (1) deteriorating growing conditions in the Mediterranean region coinciding with declining area planted in Canada and (2) concurrently deteriorating growing conditions and declining area planted in the Indian subcontinent. [EconLit citations: Q11, Q17]

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