Asymmetric price transmission in the Chinese pork and pig market
Abstract
Purpose
The purpose of this paper is to analyze price transmission in the Chinese pork market between 1994 and 2016 and examine any incidence and causes of asymmetric price transmission.
Design/methodology/approach
The approach uses threshold autoregressive models, asymmetric error correction models and autoregressive moving average models to examine the price transmission using monthly pig and pork prices from 1994 to 2016.
Findings
While a symmetric price transmission between pork and pig prices was identified for the period between June 1994 and June 2007, an asymmetric price transmission response between pork and pig prices was found for the period July 2007 to June 2016. Key factors behind the asymmetric price transmission include the chicken price and China’s provisional purchasing and stockpiling policy which is having a counter-productive impact on prices.
Originality/value
The paper contributes to the literature by examining price transmission in two different periods: 1994 to 2007 where prices are lower and more stable; and 2007 to 2016 where prices are higher and volatile. The paper examines the impact of production and market policies on price transmission in the Chinese pork and pig market, with several policy implications.
Keywords
Acknowledgements
This research was financially supported by the National Natural Science Foundation of China (71373284 and 71203221) and the China Scholarship Council (CSC). The authors sincerely thank Dr Hu Bingchuan from Chinese Academy of Social Sciences and Dr Zhu Zengyong from Chinese Academy of Agricultural Sciences for providing useful comments on this manuscript. The authors are also grateful for the comments of two anonymous reviewers that assisted with a revision of the paper.
Citation
Dong, X., Brown, C., Waldron, S. and Zhang, J. (2018), "Asymmetric price transmission in the Chinese pork and pig market", British Food Journal, Vol. 120 No. 1, pp. 120-132. https://doi.org/10.1108/BFJ-02-2017-0056
Publisher
:Emerald Publishing Limited
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