Macroeconomics

Domestic market

Market price

Engineering

Microeconomics

Shock (circulatory)

Protectionism

Economics

Market economy

Cointegration

Short run

International trade

Error correction model

Economic interventionism

Commodity market

Commodity

Politics

Political science

Monetary economics

Econometrics

Internal medicine

Financial economics

Market integration

Medicine

Transmission (telecommunications)

International economics

Finance

Factor market

Electrical engineering

Applied Economics

This paper examines whether the grain market of Turkey is cointegrated with the world grain market. Using an error correction model, we analyse the response of producer prices of wheat, barley, maize, soybean and rice to changes in world market prices. Results show that the rice market of Turkey is not cointegrated with the world rice market, while the other commodity markets are weakly cointegrated. Results also show that pass-through of changes in the world prices to the domestic prices is relatively low both in the short run and in the long run, and that adjustment to the new equilibrium following a shock is slow. Government intervention policies both at the border and as domestic price supports seem to be underlying causes of the weak cointegration. Fewer protectionist policies and lower levels of government intervention are necessary to increase the domestic grain market integration with the international grain market.

Market integration and spatial price transmission in grain markets of Turkey