Open AccessEstimation of peach supply response in Colombia using a Vector Error Correction Model
Author(s) -
Susan Elsa Cancino,
Giovanni Orlando Cancino-Escalante
Publication year - 2021
Publication title -
entramado
Language(s) - English
Resource type - Journals
eISSN - 2539-0279
pISSN - 1900-3803
DOI - 10.18041/1900-3803/entramado.1.7243
Subject(s) - error correction model , econometrics , pace , economics , estimation , mathematics , short run , yield (engineering) , elasticity (physics) , vector autoregression , augmented dickey–fuller test , term (time) , statistics , cointegration , macroeconomics , materials science , physics , management , geodesy , quantum mechanics , metallurgy , composite material , geography
An empirical study of peach supply response to own-price and yield in Colombia using time series data from 2000 to 2018 was undertaken. A quantitative, correlational and non-experimental research design was selected and the Johansen´s co-integration as well as the vector error correction framework were employed. The Augmented Dickey-Fuller test showed that the time series were integrated of order one and the Johansen´s co-integration confirmed the existence of a long-term relationship between the variables. Moreover, the short and long run coefficients for own-price and yield were statistically significant and presented the expected signs, however, estimated own-price elasticity was below unit suggesting it is not an important factor in peach supply response. Furthermore, the vector error correction coefficient (-0.32) was negative and in line with theory, which showed that in the long-run, the model converges towards equilibrium, however at a relatively slow pace. Therefore, it can be concluded that, overall, the proposed model contributes to the understanding of the dynamics in peach output supply.