The Dynamics of Food Price Convergence in Ethiopia

Abstract

This paper examines the dynamics of relative price convergence of nine agricultural commodities among regions in Ethiopia using a panel dataset of 18-year monthly prices collected by CSA in two periods (1996-2004 and 2005-2013). Panel unit root tests, fixe-effects, and half-life method were employed to estimate the rate and speed of relative price convergence of commodities. The findings markedly indicate low rate and speed of relative price convergence and considerably persistent relative price shocks unadjusted among regions, suggesting the need to design proactive market policy intervention in improving convergence of commodity prices in Ethiopia.