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Food Price Crisis in Indonesia: Alert from the Key Markets

Author

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  • Mujahid, Irfan
  • Kalkuhl, Matthias
Abstract
Food price variations can be very costly when they abrupt and unanticipated. In the current new era of market uncertainty, monitoring food prices become highly important to foresee any potential crisis. This study proposes an alternative approach in monitoring food price movements in many different markets within a country by focusing only on the key markets. Using monthly retail rice prices from the 25 major markets in Indonesia, we identify the key markets whose price movements can help to forecast price movements in all other markets. The key markets are identified using granger causality tests conducted in the vector error correction model framework. The relevance of monitoring the key markets in detecting price crisis is tested using Probit and Poisson models. We found that albeit not all of alert phases lead to crises, monitoring the key markets can help to forecast price movements in all markets across the country.

Suggested Citation

  • Mujahid, Irfan & Kalkuhl, Matthias, 2015. "Food Price Crisis in Indonesia: Alert from the Key Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205277, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:205277
    DOI: 10.22004/ag.econ.205277
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    References listed on IDEAS

    as
    1. Araujo, Claudio & Araujo-Bonjean, Catherine & Brunelin, Stéphanie, 2012. "Alert at Maradi: Preventing Food Crises by Using Price Signals," World Development, Elsevier, vol. 40(9), pages 1882-1894.
    2. Anderson, Kym & Nelgen, Signe, 2012. "Trade Barrier Volatility and Agricultural Price Stabilization," World Development, Elsevier, vol. 40(1), pages 36-48.
    3. Anderson, Kym & Jha, Shikha & Nelgen, Signe & Strutt, Anna, 2012. "Reexamining Policies for Food Security," ADB Economics Working Paper Series 301, Asian Development Bank.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Agricultural and Food Policy; Food Security and Poverty;

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