Maize Price Volatility : Does Market Remoteness Matter?

This paper addresses the role of market remoteness in explaining maize price volatility in Burkina Faso. A model of price formation is introduced to demonstrate formally that transport costs between urban and rural markets exacerbate maize price volatility. Empirical support is provided to the proposition by exploring an unusually rich data set of monthly maize price series across 28 markets over 2004-13. The methodology relies on an autoregressive conditional heteroskedasticity model to investigate the statistical effect of road quality and distance from urban consumption centers on maize price volatility. The analysis finds that maize price volatility is greatest in remote markets. The results also show that maize-surplus markets and markets bordering Côte d'Ivoire, Ghana and Togo have experienced more volatile prices than maize-deficit and non-bordering markets. The findings suggest that enhancing road infrastructure would strengthen the links between rural markets and major consumption centers, thereby also stabilizing maize prices.

Bibliographic Details

Main Authors:	Moctar, Ndiaye, Elodie, Maitre d’Hôtel, Tristan, Le Cotty
Format:	Working Paper biblioteca
Language:	en_US
Published:	World Bank Group, Washington, DC 2015-02
Subjects:	price decreases, deficit, price forecast, price levels, price increases, stock, global markets, futures, information system, sales, income, transportation costs, supplier, exchange, liquidity, trend, price spreads, infrastructure development, gasoline, domestic price, road infrastructure, price, market supply, rural market, international bank, inflation, market information, oligopoly, price variation, travel costs, wholesaler, road, commercialization, costs, transport, population growth, regional trade, food price, price volatility, surplus, products, liquidity constraints, supply shocks, monopoly, marketing, markets, agricultural prices, competitive market, price series, product, price behavior, inventories, gross domestic product, negative shocks, supply shock, economic reform, road quality, commodity price, liberalization, negative shock, food production, infrastructure, market price, transaction, initiatives, data availability, storage capacity, deficit regions, opportunity cost, good, travel, transportation, policies, international trade, volatility, border crossing, barriers, agricultural price, third world, local market, demand, price risk, demand function, consumer price, price level, price changes, price fluctuations, price formation, price effect, local markets, transaction costs, market, foreign exchange, rural markets, price increase, deficit region, roads, crossing, price shift, regional integration, economic development, trade, security, growth rate, transportation cost, market equilibrium, share, poverty, high transport, supply, purchasing, fuel, competitive framework, market demand, investments, market integration, consumer price index, market reform, price decrease, wholesalers, commodities, price variations, road conditions, exchange rate, suppliers, excess supply, food prices, transport costs, price index, commodity prices, travel time, remote areas, commodity, prices, cost of capital, development bank, storage,
Online Access:	http://hdl.handle.net/10986/21641
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