A Multivariate Approach for Identification of Optimal Locations with in Ethiopia’s Wheat Market to Tackle Soaring Inflation on Food Price

Abstract

Based on vector error correction model, persistence profile and common trend estimation, optimal locations, that can be used to stabilize Ethiopian grain market, in general, and wheat market, in particular, are identified. Most of the Ethiopian wheat markets are observed to follow one common trend. This single common trend is mainly determined by producer centers and one deficit market of Jimma. Methodologically the grid search methodology proposed by early authors, in search of one price system, is given both theoretical and empirical justification, in this paper, from institutional economics point of view.

Keywords: Inflation, Ethiopia, Grain market, Cointegration, Common Trend