Rice Prices Shocks Transmission from International to Domestic Markets: An Evidence from Bamako and Kayes Rice Markets in Mali

Abstract

This study assessed the transmission of international price shocks to domestic prices in Bamako and Kayes markets. Threshold Autoregressive Model developed by Balke and Fomby (1997) was used in the study. The empirical analysis used monthly price data of Bamako and Kayes markets over the period January 2006 to September 2016. The results of descriptive statistics showed that during the period 2006-2016, the average price of imported rice were 313 CFA francs in Bamako and 297 CFA francs in Kayes, respectively. The average price for local rice were 328 CFA francs in Bamako and 387 CFA francs in Kayes. The empirical results showed that local rice price in Kayes as well as imported rice price in Bamako responded asymmetrically to international price changes. The increase of international price was more rapidly transmissible to domestic prices than its decrease. Better regulation of rice markets and more road infrastructure would limit the power of commercial intermediaries and contribute to a better functioning of market structures.