Market Timing, Farmer Expectations, and Liquidity Constraints

48 Pages Posted: 8 Jun 2021 Last revised: 29 Oct 2022

See all articles by Rui A. Albuquerque

Rui A. Albuquerque

Boston College, Carroll School of Management; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Bruno Araujo

Eduardo Mondlane University (UEM)

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department

Gerivásia Mosse

Eduardo Mondlane University (UEM)

Pippy Vletter

Cooperative League of the United States of America

Helder Zavale

Eduardo Mondlane University (UEM)

Multiple version iconThere are 2 versions of this paper

Date Written: October 28, 2022

Abstract

We use data on price expectations from a survey of randomly sampled smallholder farmers in Mozambique. Across all crops, farmers expect higher prices in the lean season. Yet, farmers report selling mostly within two weeks of harvest at significantly lower prices with liquidity constrained farmers selling their harvest 50% faster than unconstrained farmers. Further, liquidity constrained farmers respond more to future price expectations than unconstrained farmers. We address causality using a regression discontinuity design exploiting abnormal rainfall from cyclones Idai and Kenneth. We develop a model on market timing and its relation to price expectations and liquidity constraints.

Keywords: Liquidity constraints, household expectations, market timing, storage, household finance, developing economies

JEL Classification: D14, D15, G51, O13, O16, Q11, Q12, Q14

Suggested Citation

Albuquerque, Rui A. and Araujo, Bruno and Brandao-Marques, Luis and Mosse, Gerivásia and Vletter, Pippy and Zavale, Helder, Market Timing, Farmer Expectations, and Liquidity Constraints (October 28, 2022). Available at SSRN: https://ssrn.com/abstract=3856672 or http://dx.doi.org/10.2139/ssrn.3856672

Rui A. Albuquerque (Contact Author)

Boston College, Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

HOME PAGE: http://sites.google.com/view/ruialbuquerque/home

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Bruno Araujo

Eduardo Mondlane University (UEM) ( email )

Maputo
Mozambique

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
2026238308 (Phone)
2025898308 (Fax)

Gerivásia Mosse

Eduardo Mondlane University (UEM) ( email )

Maputo
Mozambique

Pippy Vletter

Cooperative League of the United States of America ( email )

United States

Helder Zavale

Eduardo Mondlane University (UEM) ( email )

Maputo
Mozambique

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
73
Abstract Views
439
Rank
478,174
PlumX Metrics