
	Trends in Agricultural Economics
	Year: 2017 \| Volume: 10 \| Issue: 2 \| Page No.: 12-17 DOI: 10.3923/tae.2017.12.17

Co-integration and Causality Analysis in Major Natural Rubber Markets of Nigeria

Agbonkpolor Nosa Betty

, Alufohai Grace Oghenerobor, Mesike Chinye Samuel and Adindu Ashetu Grace

Abstract: Background and Objective: In recent times, natural rubber prices have been on the increase but production is still on the decrease in Nigeria. Could it be that producers/marketers not taking the advantage of price transmissions between markets to improve their profit margin? This study aimed to determine the long-run and short-run rubber market price integrations and transmission between local markets in Edo, Delta and Akwa-Ibom states in South-South Nigeria. Materials and Methods: Three major state markets were purposively selected from South-South Nigeria namely-Edo, Delta and Akwa-Ibom States. Data for the study were collected from Average monthly retail price data (N/kg) of natural rubber, covering the period January, 2005 to December, 2015 (11 years). Data collected was analyzed using Johansen co-integration test and Granger causality by VECM. Results: Results indicated that price series were not stationary in their level form. The Delta state price appeared to respond faster to changes than the Edo and Akwa-Ibom price. The study also showed the existence of co-integration among the studied markets. Granger causality showed unidirectional causality between Akwa-Ibom and Delta states, bidirectional for the other two market pairs. Conclusion: The granger causality shows the direction of price formation between two markets and related spatial arbitrage, there were bidirectional and unidirectional causalities between the market pairs, thus, changes in the price of rubber in one market would cause the price of rubber in another state to adjust immediately and the estimated speed of adjustment is about 32.55%. The significant coefficient of the error correction term showed immediate adjustment to changes in the long-run equilibrium.

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How to cite this article:

Agbonkpolor Nosa Betty, Alufohai Grace Oghenerobor, Mesike Chinye Samuel and Adindu Ashetu Grace, 2017. Co-integration and Causality Analysis in Major Natural Rubber Markets of Nigeria. Trends in Agricultural Economics, 10: 12-17.

DOI: 10.3923/tae.2017.12.17

URL: https://scialert.net/abstract/?doi=tae.2017.12.17

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