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Co-integration and Causality Analysis among Major Black gram Markets in Andhra Pradesh, India
pp.40-54
Market integration and prices in pulse crops like black gram play an important role in determining the production decisions of the farmers and diversification towards high value nutritious crops. In this context, the present study explores extent of market integration and price transmission in selected major black gram markets in Andhra Pradesh using Johansen co-integration, Vector Error Correction Model and Granger causality test. The study used monthly prices data of black gram (Rs/quintal) sourced from selected markets of Srikakulam, Krishna and Kurnool spanning January, 1990 to December, 2019. The results of the study strongly buttressed the existence of co-integration and interdependence of selected black gram markets in Andhra Pradesh. However, the speed of adjustment of the prices found to be moderate in Krishna market and quite weaker in Srikakulam market and thereby prices correct a small percentage of the disequilibrium in these markets with the greatest percentage by the external and internal forces. So, it necessitates the need for future research, to investigate the influence of external and internal factors such as market infrastructure, Government policy and self-sufficient production, product characteristics and utilization towards market integration. As there exists only unidirectional causality from Krishna to Kurnool and from Krishna to Srikakulam markets, it calls for strengthening the information technology for flow of market information regularly to help the farmers for increasing their income.
1. Introduction
2. Review of Literature
3. Empirical Methodology:
3.1. To check the stationarity of the series
3.2. Co-integration
3.3 Error Correction Method
3.4. Granger Causality Test
4. Results and Discussion
4.1. Unit Root Test
4.2. Johansen Co-integration Test
4.3. Estimates of VECM
4.4. Granger Causality Test
5. Summary and Conclusions
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