The impact of agricultural and trade policies on price transmission: The case of Tajikistan and Uzbekistan

This paper examines the extent and speed of price transmission from international to local markets in two transition economies, Tajikistan and Uzbekistan. The two countries have similar economic backgrounds, but a notable difference is that Tajikistan has adopted a more liberal agricultural trade regime than Uzbekistan. We use a vector error correction model to analyse how global agricultural prices are transmitted to domestic food prices in the two countries. We find strong cointegration between world market and domestic prices in Tajikistan for food crops but not meat, and no cointegration in Uzbekistan.