A Spatio-temporal Analysis of Agricultural Prices: An Application to Colombian Data
La serie Borradores de Economía es una publicación de la Subgerencia de Estudios Económicos del Banco de la República. Los trabajos son de carácter provisional, las opiniones y posibles errores son responsabilidad exclusiva del autor y sus contenidos no comprometen al Banco de la República ni a su Junta Directiva.
This paper studies whether the geographical separation of markets constitutes a factor that helps explain the dynamics of agricultural prices. To do this, we employ a highly disaggregated dataset for Colombia that consists of weekly observations on wholesale prices for 18 agricultural products traded in markets scattered around the country. The sample period spans for almost a decade. According to our results, which are based on generalised impulse response functions, distance (and thus transportation costs) is a factor that helps explain the speed at which prices adjust to shocks in other locations, thus confirming that price adjustments take longer for markets farther apart.
