Indian Journal of Economics and Development

Open Access Open Access  Restricted Access Subscription Access

Co-Integration Analysis of Wholesale Price of Wheat in Selected Market of Sriganganagar District of Rajasthan


Affiliations
1 College of Agriculture, SKRAU, Bikaner, Rajasthan, India
2 Agro-Economic Research Centre, Sardar Patel University, Anand, Gujarat, India
 

Background: Agricultural price movements have been a matter of serious concern for policy makers in our country as the behaviour of agricultural prices is affecting adversely to the steady economic development. This paper test market co- integration of wheat in Sriganganagar District of Rajasthan.

Methods: This paper tests the extent of co-integration of wholesale prices of wheat among major markets of Sriganganagar district of Rajasthan by using Johansen test, examined the causality by granger causality tests and also captures the speed of adjustment to deviations in long run equilibrium in wheat markets by using Vector Error Correction Model(VECM). The data used in the co-integration analysis consists of monthly wholesale prices of nine gram dominated markets of Rajasthan for the period from 2005 to 2014.Monthly wholesale price data were for the study.

Findings: The results of the Augmented Dickey-Fuller (ADF) unit ischolar_main test for wheat showed that the existing data were non-stationary but their first differences were stationary. After taking first difference, all the series becomes stationary which is obvious from the fact that calculated values (-9.296309 to -14.18193) for all the markets were less than the critical value (- 4.038365)and were free from the consequence of unit ischolar_main. Johansen's co-integration test for wheat indicated the presence of at least eight co-integrating equation at 5 per cent level of significance. Hence markets were having long run equilibrium relationship. The pairwise granger's causality test for selected markets was significant at 1% level which was indicative of mutual influence exerted by the markets on each other.

Application/Improvements: Public policies in Sriganganagar district could play critical roles in facilitating market integration and thereby, market efficiency through the development of agricultural market information systems and road infrastructure.


Keywords

Co-Integration, VECM, Granger Causality Test, Whole Sale Price, Wheat.
User
Notifications

  • B Baulch. Transfer costs, Spatial arbitrage, and testing for food market integration. American journal of Agriculture Economics. 1997; 79, 477-487.

  • B Minten. Infrastructure, Market access, and agricultural prices: evidence from madagascar. International Food Policy Research Institute. 1999; 26, 1-40.

  • A. Arya. Spatial integration of selected markets in Sabarkantha district of Gujarat. Indian Journal of Agriculture Marketing. 1996; 4(3).

  • Baquedano, G. Felix, Liefert, M. William. Market integration and price transmission in consumer markets of developing countries. Food Policy. 2014; 44, 103-114

  • J. P. Basu, S. Dinda. Market integration: An application of error correction model to potato market in Hooghly district, West Bengal. Indian Journal of Agricultural Economics. 2003; 58(4), 742-751.

  • Hnin Yu Lwin, T. Yutaka, S. Fukuda, S. Kai. Market integration analysis in selected rice markets of Myanmar. Journal of the Faculty of Agriculture, Kyushu University. 2005; 50(2), 649-663.

  • D Dickey, W Fuller. Distribution of the estimates for autoregressive time series with a unit ischolar_main. Journal of American Statistics Association. 1979; 74, 427-431.

  • RF Engle, CWJ Granger. Cointegration and error correction: representation, estimation and testing. Econometrica. 1987; (55), 251-276.

  • N. Singh, N. L. Agarwal. Market integration for cumin seed in Rajasthan. Indian Journal of Agricultural Marketing. 2000; 14(2),24-30.

  • S Johansen. Statistical analysis of cointegration vectors. Journal Economic Dynamics Control. 1988; 12(2-3), 231254.

  • M. Ghosh, Cointegration tests and spatial integration of rice markets in India. Indian Journal of Agricultural Economics. 2000; 55(4), 616-626.

  • M. Ghosh. Spatial integration of wheat markets in India: evidence from co-integration tests. Oxford Development Studies. 2003; 31(2), 159-171.

  • Patel, Anil. Market integration and pattern of market arrivals of rapeseed-mustard in Mehsana district of Gujarat. Agricultural Marketing. 2000; 42(4), 24-35.

  • N. Raveendran, S. Selvam, D. Murugananthi, P. Padmavathy. Impact of agricultural policy on the integration of major markets of Bellary onion in India. Indian Journal of Agricultural Marketing. 2007; 31.


Abstract Views: 319

PDF Views: 176




  • Co-Integration Analysis of Wholesale Price of Wheat in Selected Market of Sriganganagar District of Rajasthan

Abstract Views: 319  |  PDF Views: 176

Authors

Meera
College of Agriculture, SKRAU, Bikaner, Rajasthan, India
D.P. Singh
College of Agriculture, SKRAU, Bikaner, Rajasthan, India
Hemant Sharma
Agro-Economic Research Centre, Sardar Patel University, Anand, Gujarat, India

Abstract


Background: Agricultural price movements have been a matter of serious concern for policy makers in our country as the behaviour of agricultural prices is affecting adversely to the steady economic development. This paper test market co- integration of wheat in Sriganganagar District of Rajasthan.

Methods: This paper tests the extent of co-integration of wholesale prices of wheat among major markets of Sriganganagar district of Rajasthan by using Johansen test, examined the causality by granger causality tests and also captures the speed of adjustment to deviations in long run equilibrium in wheat markets by using Vector Error Correction Model(VECM). The data used in the co-integration analysis consists of monthly wholesale prices of nine gram dominated markets of Rajasthan for the period from 2005 to 2014.Monthly wholesale price data were for the study.

Findings: The results of the Augmented Dickey-Fuller (ADF) unit ischolar_main test for wheat showed that the existing data were non-stationary but their first differences were stationary. After taking first difference, all the series becomes stationary which is obvious from the fact that calculated values (-9.296309 to -14.18193) for all the markets were less than the critical value (- 4.038365)and were free from the consequence of unit ischolar_main. Johansen's co-integration test for wheat indicated the presence of at least eight co-integrating equation at 5 per cent level of significance. Hence markets were having long run equilibrium relationship. The pairwise granger's causality test for selected markets was significant at 1% level which was indicative of mutual influence exerted by the markets on each other.

Application/Improvements: Public policies in Sriganganagar district could play critical roles in facilitating market integration and thereby, market efficiency through the development of agricultural market information systems and road infrastructure.


Keywords


Co-Integration, VECM, Granger Causality Test, Whole Sale Price, Wheat.

References