Open AccessEvaluation of Rice Markets Integration in Bangladesh
Author(s) -
Mohammad Ismail Hossain,
Wim Verbeke
Publication year - 2010
Publication title -
the lahore journal of economics
Language(s) - English
Resource type - Journals
eISSN - 1811-5446
pISSN - 1811-5438
DOI - 10.35536/lje.2010.v15.i2.a4
Subject(s) - market integration , error correction model , liberalization , economics , agriculture , government (linguistics) , agricultural economics , cointegration , international economics , econometrics , macroeconomics , market economy , ecology , biology , linguistics , philosophy
The liberalization of the agricultural sector in general and the ricesubsector in particular has been a major component of Bangladesh’s structuraladjustment program initiated in 1992. However, the government has continuedto intervene in the rice subsector. This paper examines whether theregional/divisional rice markets have become spatially integrated following theliberalization of the rice market. Wholesale weekly coarse rice prices at sixdivisional levels over the period of January 2004 to November 2006 were used totest the degree of market integration in Bangladesh using co-integration analysisand a vector error correction model (VECM). The Johansen co-integration testindicated that there are at least three co-integrating vectors implying that ricemarkets in Bangladesh during the study period are moderately linked togetherand therefore the long-run equilibrium is stable. The short-run marketintegration as measured by the magnitude of market interdependence and thespeed of price transmission between the divisional markets has been weak.