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Weather Shocks and Spatial Market Efficiency: Evidence from Mozambique

César Salazar, Hailemariam Ayalew, Peter Fisker
2018 Figshare  
The aim of this paper is to study the association between weather shocks (droughts and floods) and agricultural market performance in Mozambique. To do so, we employ a dyadic regression analysis on monthly maize prices, transport costs, and spatial identification of markets as well as droughts and flooded areas. Our estimates show that, while a drought reduces price differences between markets, price dispersion increases during flood periods, an effect that is mainly driven by increases in
more » ... y increases in transport costs. Finally, floods are found to affect price differences more if markets are closer to each other and if the road infrastructure quality is poor. An important implication of our results is that markets show some degree of efficiency during supply shock periods in Mozambique. However, spatial market integration continues to be insufficient, probably due to high transfer costs.
doi:10.6084/m9.figshare.7177322 fatcat:ah7few3cc5asfe73a535p7qgu4