Spatial Price Adjustment with and without Trade

• Autores: Emma C. Stephens, Edward Mabaya, Stephan von Cramon-Taubadel, Christopher B. Barrett
• Localización: Oxford bulletin of economics and statistics, ISSN 0305-9049, Vol. 74, Nº. 3, 2012, págs. 453-469
• Idioma: inglés
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• Resumen

  • We investigate the possibility that price transmission between spatially distinct markets might vary during periods with and without physical trade flows. We test for differences between trade and non-trade regimes by using generalized reduced rank regression (GRRR) techniques suggested by Hansen (2003). We apply these techniques to semi-weekly price and trade flow data for tomato markets in Zimbabwe and find that intermarket price adjustment occurs in both trade and non-trade periods. Indeed, the adjustments are generally larger and more rapid in periods without physical trade flows. This finding underscores the importance of information flow for market performance.