Research Article Open Access

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

Shuqin Yan1, Kolawole Ogundari2, Hiroshi Isoda1 and Shoichi Ito1
  • 1 Kyushu University, Japan
  • 2 University of Delaware, United States

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.

American Journal of Economics and Business Administration
Volume 8 No. 2, 2016, 44-52

DOI: https://doi.org/10.3844/ajebasp.2016.44.52

Submitted On: 15 December 2015 Published On: 31 July 2016

How to Cite: Yan, S., Ogundari, K., Isoda, H. & Ito, S. (2016). Study on the Relationship between International and Domestic Grain Prices in Developing Countries—An Application of Markov-Switching Autoregressive Model—. American Journal of Economics and Business Administration, 8(2), 44-52. https://doi.org/10.3844/ajebasp.2016.44.52

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Keywords

  • Grain Price-Hikes
  • Markov-Switching Autoregressive (MS-AR) Model
  • Regimes
  • International/Domestic Prices