Testing the Integration in Pulses Market: Empirical Evidence from Major Lentil Wholesale Markets in India
Author(s):
ALKA RAI, Dr. Manesh Choubey
Keywords:
ADF test, Granger causality test, Johansen co-integration Test, Lentil, Market integration
Abstract
This study has tested the long-run market integration across the four major wholesale lentil markets from the two leading Lentil producing states, Madhya Pradesh, and Uttar Pradesh. Two major wholesale markets, Attara and Banda are selected from Uttar Pradesh, and another two wholesale markets, Jabalpur and Raisen are selected from Madhya Pradesh based on the availability of data on prices and arrival. The empirical results have confirmed the presence of long-run price connections across the selected markets. Johansen's cointegration test has shown that even though the selected Lentil markets in India are geographically isolated and spatially segmented, they are well-connected in terms of prices of Lentil and have long-run price linkage between them. Granger Causality Test shows that there are unidirectional causalities between Attara and Jabalpur markets which implies that a price change in the former market in each pair granger causes the price formation in the latter market, whereas the price change in the latter market is not feedbacked by the price change in the former market in each pair. However, out of six cases, bi-directional causality is observed in two cases i.e., Attara-Banda, Banda-Attara and Jabalpur-Raisen, Raisen-Jabalpur, thus, indicating there is a perfect price transmission mechanism between these market pairs.
Article Details
Unique Paper ID: 159769

Publication Volume & Issue: Volume 9, Issue 12

Page(s): 442 - 447
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