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\hypersetup{pdftitle={Are Spatial Rice Markets in Bangladesh Cointegrated in the Regime of Market Liberalisation? Implication for Spatial Food Security},pdfauthor={Mohammad Jahangir Alam, Ismat Ara Begum, Jeroen Buysse, Guido van Huylenbroeck},pdfsubject={Tropentag 2010: Abstract},pdfkeywords={Bangladesh, rice markets, threshold cointegration},pdfpagemode=None,colorlinks=true}
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\parbox[b]{13.4cm}{\centering \large{\textbf{Tropentag, September 14-16, 2010, Zurich}}\\[1ex] \Large{``World Food System  ---\\A Contribution from Europe''\\[2ex]}}
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\begin{center}
\Large{\textbf{Are Spatial Rice Markets in Bangladesh Cointegrated in the Regime of Market Liberalisation? Implication for Spatial Food Security\footnote{\textbf{Contact Address:} Mohammad Jahangir Alam, Ghent University, Agricultural Economics, 653 Coupure Links, 9000~Ghent, Belgium, \mbox{e-mail}: \email{alambau2003@yahoo.com}}\\[0.8ex]}}
\normalsize{\textsc{Mohammad Jahangir Alam$^{1}$, Ismat Ara Begum$^{2}$, Jeroen Buysse$^{3}$, Guido van Huylenbroeck$^{4}$}}
\end{center}
\begin{itemize*}
\item[]{\small{\textit{$^{1}$Ghent University, Agricultural Economics, Belgium}}}
\item[]{\small{\textit{$^{2}$Bangladesh Agricultural University, Agricultural Economics, }}}
\item[]{\small{\textit{$^{3}$Ghent University, Agricultural Economics, }}}
\item[]{\small{\textit{$^{4}$University of Ghent, Department of Agricultural Economics, Belgium}}}
\end{itemize*}
\index[author]{Alam, Mohammad Jahangir}
\index[author]{Begum, Ismat Ara}
\index[author]{Buysse, Jeroen}
\index[author]{van Huylenbroeck, Guido}
\begin{center}
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\textbf{Abstract}
\begin{abstract}
\normalsize{
The Bangladesh government has liberalised the domestic rice markets, has removed all the barriers for rice movements by allowing private traders to participate in the markets. Moreover, the roads and communications network developed fairly. Hence, well functioning of the domestic markets is expected. Knowledge on the domestic market efficiency is crucial to access the performance of the markets and also to identify where to correct the market, if any distortion exists. Therefore, the issue of efficiency has much attracted in the literatures and are often leads to concerns over the impact of market liberalisation across developed, developing and transition economies alike (Baulch, 1997). The seminal work of Ravallion (1986) shows that there is limited market integration in rice markets in Bangladesh. Goletti (1995) concludes that the market integration is moderate. The limited and moderate market integration plausibly was arisen from the restricted rice movement and poor infrastructure and communications. Dawson (2002) shows that rice markets are perfectly integrated. But none of the studies considered the role of transaction cost in the market integration process. The present study tries to fill"=up this gap by testing the threshold cointegration with the threshold auto"=regression (TAR) model. To do so, the authors followed the central market hypothesis in where Dhaka (the capital city) is the central market (demanding market) and 3 regional markets as (supplying market) its periphery. The paper contributes in two different ways. First, it used the `state of the art' methodology to test the market integration and secondly, the test considers the role of transaction cost, therefore testing the threshold cointegration. The study would therefore provide crucial information which has an implication for the spatial food security in Bangladesh. The unit root test was performed to test the data stationarity. Engel Granger bi"=variate cointegration along with Johansen full information maximum likelihood test was performed for identifying cointegration relationship in the vector error correction modelling (VECM) framework. Finally, Engle-Granger two step procedures were used to test the threshold effect in the cointegration relationship.}

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\noindent \textbf{Keywords:} Bangladesh, rice markets, threshold cointegration
\index[key]{Bangladesh}
\index[key]{Rice!markets}
\index[key]{Threshold cointegration}
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