Vol. 12, Issue 5 (2023)

Author(s):
M Maheshnath, R Vijaya Kumari, K Suhasini, D Srinivasa Reddy and A Meena

Abstract:
This study tests long-run spatial market integration between price pairs of maize in five major markets viz., Davangere, Kurnool, Chhindwara, Sangli and Nizamabad of the India by adopting important econometric tools like Johansen’s multivariate co integration approach, Augmented Dickey-Fuller (ADF), Granger causality test and Vector Error Correction Model (VECM). The study has confirmed the presence of co-integration, implying the six years price association among the markets. To get the additional evidence as to whether and in which direction price transmission is occurring between the market pairs, Granger causality test has been used, which has confirmed Devangare and Nizamabad to be the price-determining markets. Devengare-Nizamabad has been found comparatively more efficient as it has depicted most bidirectional causal relations with other markets. The Vector Error-Correction Model (VECM) shown the selected markets of Maize are employed to know the speed of adjustments for the prices of Maize among selected markets, for short run and long run equilibrium of prices.