Institutions and Market Integration: The Case of Coffee in the Ethiopian Commodity Exchange

48 Pages Posted: 5 Nov 2015

See all articles by Manuel A. Hernandez

Manuel A. Hernandez

International Food Policy Research Institute (IFPRI)

Shahidur Rashid

International Food Policy Research Institute (IFPRI)

Solomon Lemma

International Food Policy Research Institute (IFPRI)

Tadesse Kuma

Ethiopian Development Research Institute (EDRI)

Date Written: September 25, 2015

Abstract

While the Ethiopian Commodity Exchange (ECX) is widely credited to be a successful on several accounts, there has been little rigorous empirical investigation. This paper attempts to fill that gap by analyzing how ECX has influenced the international-domestic price relationships of coffee — the largest traded commodity on its floor. We examine three aspects of price dynamics — market interdependence, volatility transmission, and structural breaks — using a spatially disaggregated prices of five coffee varieties. The results indicate that contrary to popular media stories, ECX’s success in improving coffee price relationships has been limited. The results appear to be robust under all three sets of analysis.

Keywords: Ethiopia; East Africa; Africa South of Sahara; Africa; markets; prices; coffee; commodity markets; market interdependence; volatility transmission; Ethiopian Commodity Exchange

JEL Classification: Q02, Q11, C32

Suggested Citation

Hernandez, Manuel A. and Rashid, Shahidur and Lemma, Solomon and Kuma, Tadesse, Institutions and Market Integration: The Case of Coffee in the Ethiopian Commodity Exchange (September 25, 2015). IFPRI Discussion Paper 1464. Available at SSRN: https://ssrn.com/abstract=2685821

Manuel A. Hernandez (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Shahidur Rashid

International Food Policy Research Institute (IFPRI) ( email )

United States
202-862-6498 (Phone)
202-467-4439 (Fax)

HOME PAGE: http://www.ifpri.org/staffprofile/shahidur-rashid

Solomon Lemma

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Tadesse Kuma

Ethiopian Development Research Institute (EDRI) ( email )

P.O. Box 2479
Addis Ababa
Ethiopia

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