An Econometric Analysis of Markets for Pulses: A Case Study of Green Gram
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Author: K.M. Shivakumar and Uma Gowri M. 1* 2
Author Address: 1 2 Professor and Post-Doctoral Fellow, Department of Agricultural Economics, Centre for Agricultural and Rural Development Studies, Tamil Nadu Agricultural University, Coimbatore- 641 003 (Tamil Nadu)
Keywords: Co-integration, green gram, markets, price volatility, vector correction.
JEL Codes: C22, C50, D40, Q13.
Abstract
Due to reduced crop area under pulses and ever-increasing domestic demand, India imports every year large chunks of a variety of pulses. The time series econometric analyses was used to estimate market integration, price transmission, and price volatility happening in the major domestic markets for one of the imported pulses namely green gram. The time-series data pertained to prices of a green gram for the major markets are sourced from 2006 to 2018 on a monthly frequency. Further, the vertical integration among the production and consumption markets were also studied using these analyses. In order to remove the non-stationarity element in the price series, the ADF test was used, which were non-stationary at levels but became stationary at the first difference. The price volatility prevailing in the green gram markets of India was estimated by GARCH (1,1) model revealed that all the markets were exhibiting consistent variability in market prices. Among these markets, there existed bi-directional causation which was confirmed by the Granger Causality test. The presence of three co-integration vectors for these markets proved the existence of a long-run equilibrium for green gram prices. Tamil Nadu market came under short-run equilibrium whereas remaining markets had long-run equilibrium estimated by VECM. Retail prices of Madurai market had bi-directional price influence with Tamil Nadu market. Hence it is suggested that better price discovery and timely arket intelligence would be necessary to manage the price shocks occurring in the green gram markets in India.
Description
Indian Journal of Economics and Development
Volume 16 No. 4, 2020, 559-564
DOI: https://doi.org/10.35716/IJED/20203
Indexed in Clarivate Analytics (ESCI) of WoS
Scopus: Title Accepted
NAAS Score: 4.82