Spatial integration between Finnish and Dutch potato markets |
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Authors: | Kati Jalonoja Ky sti Pietola |
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Institution: | Kati Jalonoja ,Kyö,sti Pietola |
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Abstract: | This study estimated a conditional mean model for producer prices of fresh potatoes in Finland and for wholesale selling prices of fresh potatoes in the Netherlands. Unit roots were tested in the Finnish and Dutch price series. Then, an asymmetric error correction model with thresholds was estimated for potato prices between Finland and the Netherlands. Asymmetry was allowed both in short and long-run price transmission. The results suggest that the prices are cointegrated and the arbitrage system is functioning, but with a significant time lag between the Finnish and Dutch potato markets. The price response is also asymmetric in that the Finnish price moves towards a steady state equilibrium faster from above than from below the equilibrium. |
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Keywords: | asymmetry cointegration market integration potato market prices thresholds |
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