An Empirical Comparison of Coffee Price Transmission in Vietnam and Colombia
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This study applies an Error Correction Model to identify the market integration and price transmission between the grower price and the world price in Colombia and Vietnam, with an emphasis on the price long-run relationship and short-run adjustment across coffee varieties. The results show that both Vietnam and Colombia coffee market are well integrated with world market in the long run. Moreover, high quality coffee from Colombia is integrated in a higher degree than low quality from Vietnam. In the short run, price is asymmetrically transmitted in different direction for both countries, which implies that policy makers should consider quality issue when they implement any intervention.