Multiple‐Regime Spatial Price Transmission with an Application to Maize Markets in Southern Africa

15 Pages Posted: 8 Apr 2020

See all articles by Robert J. Myers

Robert J. Myers

Michigan State University - Department of Agricultural Economics

T.S. Jayne

Michigan State University

Date Written: January 2012

Abstract

Conventional threshold models of price transmission allow for different speeds of adjustment to equilibria depending on the magnitude of price differentials between markets. However, these models typically assume only one underlying long‐run equilibrium price relationship. In this article we develop a framework for allowing multiple equilibria and multiple speeds of adjustment with regime separation depending on the magnitude of trade flows between regions, rather than the magnitude of price differentials. Applying this framework to maize price transmission between South Africa and Zambia shows no transmission during periods of high imports, when the government was heavily involved in maize importation, but stronger transmission during periods of low imports when the government was not importing.

Keywords: maize, multiple thresholds, price transmission, South Africa, Zambia

Suggested Citation

Myers, Robert J. and Jayne, T.S., Multiple‐Regime Spatial Price Transmission with an Application to Maize Markets in Southern Africa (January 2012). American Journal of Agricultural Economics, Vol. 94, Issue 1, pp. 174-188, 2012, Available at SSRN: https://ssrn.com/abstract=3571675 or http://dx.doi.org/10.1093/ajae/aar123

Robert J. Myers (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States
517-432-3649 (Phone)

T.S. Jayne

Michigan State University

Agriculture Hall
East Lansing, MI 48824-1122
United States

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