Cointegration and market integration: an application to the Indonesian rice market

Alexander, Carol and Wyeth, John (1994) Cointegration and market integration: an application to the Indonesian rice market. The Journal of Development Studies, 30 (2). pp. 303-334. ISSN 0022-0388

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Abstract

This article suggests improvements in the use of regression analysis to measure spatial market integration. The procedure pioneered by Ravallion is still widespread but is valid only under certain conditions of exogeneity. The alternative offered here is an error‐correction mechanism which makes it possible to test for exogeneity as well as indicating the direction and strength of causality in price formation between markets. The method is illustrated with data on rice prices in different parts of the Indonesian market. The results confirm, among other things, that supply sources are more important than demand sources in driving prices.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences > HB Economic theory. Demography > HB0221 Price
Depositing User: Carol Alexander
Date Deposited: 25 Sep 2012 13:43
Last Modified: 25 Sep 2012 13:43
URI: http://sro.sussex.ac.uk/id/eprint/40627
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