Agricultural commodities’ price transmission from international to local markets in developing countries
研究了23个发展中国家四种主要谷物（玉米、大米、高粱、小麦）的国际价格冲击如何传导至本地市场，发现除高粱外传导弹性较强且冲击在2-3个月内被完全吸收。
The transmission of commodities prices from international to local markets is an interesting and deeply investigated topic. A fast and strong link between the two levels of the market is seen by economists as a sign of local market efficiency, allowing actors to respond fast to signals coming from the international market. However, empirical evidence on the topic is mixed, ranging from a very weak linkage between prices in the two markets to a high-speed and almost complete transmission. The present paper aims to advance the knowledge on the topic by focusing on the price transmission of four main cereals – maize, rice, sorghum, and wheat – in 23 developing and fragile economies. Employing a recent World Bank dataset with prices for several local markets in select countries, we estimate panel vector autoregressions (PVAR) to analyze the pass-through effects of international price shocks on local food prices. We find evidence for a relatively strong price transmission elasticity for all commodities except sorghum. Furthermore, the observed transmission of shocks is almost immediate. We present the policy implications of these findings. • We investigate the transmission of commodities prices from international to local markets. • The price of rice, wheat, sorghum and maize in the local markets of 23 least developed countries is analyzed through Panel VAR. • We find a transmission price elasticity of shocks generally higher than in previous studies. • The speed of convergence is also relatively high with shocks being completely absorbed after 2–3 months.