Journal
OXFORD BULLETIN OF ECONOMICS AND STATISTICS
Volume 74, Issue 3, Pages 453-469Publisher
WILEY
DOI: 10.1111/j.1468-0084.2011.00651.x
Keywords
Q13; R12; C32; P42
Funding
- Courant Research Centre 'Poverty, Equity and Growth in Developing Countries
- German Research Foundation (DFG)
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We investigate the possibility that price transmission between spatially distinct markets might vary during periods with and without physical trade flows. We test for differences between trade and non-trade regimes by using generalized reduced rank regression (GRRR) techniques suggested by Hansen (2003). We apply these techniques to semi-weekly price and trade flow data for tomato markets in Zimbabwe and find that intermarket price adjustment occurs in both trade and non-trade periods. Indeed, the adjustments are generally larger and more rapid in periods without physical trade flows. This finding underscores the importance of information flow for market performance.
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