Detecting Threshold Effects In Price Transmission

Download or read book Detecting threshold effects in price transmission written by Traore, Fousseini and published by Intl Food Policy Res Inst. This book was released on 2021-10-29 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The analysis of price transmission plays a key role in understanding markets integration. This helps identify the nature of the relationship between geographically distant markets and cross-commodity price transmission, as well as the impact of liberalization policies and the identification of regions exposed to systemic shocks. This technical note contributes to the debate between symmetric and asymmetric price transmission and proposes to present the traditional and new approaches for detecting threshold effects in price transmission while focusing on their advantages and limitations. There is no one-size-fits-all method to detect threshold effects in price transmission. Experts need to select a combination of elements (context of study, the economy under consideration, data availability…) to justify the relevancy of their choice. Beyond the presentation of the methods for detecting thresholds in price transmission, we perform an application in the case of the rice market in Senegal. The results support the evidence of an asymmetric price transmission between world and domestic prices in the short-run and a symmetric transmission in the long-run.