ISSN 2375-1061
African Journal of Agricultural Marketing ISSN 2375-1061 Vol. 8 (8), pp. 001-007, August, 2020. © International Scholars Journals
Full Length Research Paper
An application of the von Cramon-Taubadel and Loy error correction models in analyzing asymmetric adjustment between retail and wholesale maize prices in Ghana
Henry de-Graft Acquah* and Samuel Kwesi Ndzebah Dadzie
Department of Agricultural Economics and Extension, University of Cape Coast, Cape Coast, Ghana.
Accepted 12 February, 2020
Abstract
Previous studies analyzing asymmetric price transmission have been based on an econometric specification that is shown to be inconsistent with cointegration. This study draws on the concept of cointegration to implement the von Cramon-Taubadel and Loy error correction approach in analyzing retail-wholesale maize price transmission in Ghana. Asymmetries are modeled to affect the direct impact of price increases and decreases as well as adjustments to the equilibrium level. The analysis demonstrates that transmission between retail and wholesale maize prices in Ghanaian maize market is asymmetric. In accordance with common belief, retailers react more quickly to increasing wholesale prices than decreasing wholesale prices.
Key words: Asymmetric adjustments, cointegration, error correction model.