American Journal of Economics and Business Administration

Study on the Relationship between International and Domestic Grain Prices in Developing Countries—An Application of Markov-Switching Autoregressive Model—

Shuqin Yan, Kolawole Ogundari, Hiroshi Isoda and Shoichi Ito

DOI : 10.3844/ajebasp.2016.44.52

American Journal of Economics and Business Administration

Volume 8, Issue 2

Pages 44-52

Abstract

This study aims at estimating the influence of international grain prices on the domestic grain prices in 24 developing countries using a nonlinear model, Markov-Switching Autoregressive model. The results indicate that international grain prices have a positive influence on domestic grain prices before and during/after the grain price-hikes, while the degree of influence may vary depending upon grains and countries. Overall, the influences of the international grain prices on domestic grain prices during/after the price-hikes are less than before in those countries where rice or maize are staple food such as for rice in Benin, Cameroon, Niger and Tunisia and for maize in Chad, Guatemala and Nicaragua; however, the influences are generally larger than before the price-hikes for those countries where wheat is staple food such as Armenia, Georgia, Mauritania and Pakistan. For the effects of domestic prices in previous periods, they had a positive influence on current domestic grain prices in most of the countries in this study.

Copyright

© 2016 Shuqin Yan, Kolawole Ogundari, Hiroshi Isoda and Shoichi Ito. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.