Estimating Policy Effects on Spatial Market Efficiency: An Extension to the Parity Bounds Model

15 Pages Posted: 24 Apr 2020

See all articles by Asfaw Negassa

Asfaw Negassa

International Livestock Research Institute

Robert J. Myers

Michigan State University - Department of Agricultural Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

The standard parity bounds model (PBM) is extended to allow for dynamic shifts in regime probabilities in response to changes in marketing policy. The approach allows estimation of the length of the adjustment period and a statistical test for no policy effects. The extended PBM is applied to maize and wheat markets in Ethiopia. Evidence of a dynamic adjustment path is found and grain marketing reforms are found to have improved spatial efficiency in a few markets, worsened it in a few others, but generally to have had little effect on the spatial efficiency of Ethiopian grain markets.

Keywords: Ethiopian grain markets, parity bounds model, policy effects, spatial market efficiency

Suggested Citation

Negassa, Asfaw and Myers, Robert J., Estimating Policy Effects on Spatial Market Efficiency: An Extension to the Parity Bounds Model (May 2007). American Journal of Agricultural Economics, Vol. 89, Issue 2, pp. 338-352, 2007, Available at SSRN: https://ssrn.com/abstract=3583722 or http://dx.doi.org/10.1111/j.1467-8276.2007.00979.x

Asfaw Negassa (Contact Author)

International Livestock Research Institute ( email )

P.O. Box 5689
Ababa
Kenya
+251-11-6463215 (Phone)

HOME PAGE: http://www.ilri.org/research/StaffProfile.asp?ID=257

Robert J. Myers

Michigan State University - Department of Agricultural Economics ( email )

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

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