Food Prices Volatility in Rwanda: A VAR Model

HABYARIMANA Jean Baptiste^1, , MUNYEMANA Emmanuel² and IMPETA Fred Bashir³

¹Statistics Service, Ministry of Agricultural & Animal Resources, Kigali, Rwanda

²Research & Statistics, Ministry of Justice, Kigali, Rwanda

³MSc in Economics Scholar, University of Rwanda, Kigali, Rwanda

Cite this paper:
HABYARIMANA Jean Baptiste, MUNYEMANA Emmanuel and IMPETA Fred Bashir. Food Prices Volatility in Rwanda: A VAR Model. World Journal of Agricultural Research. 2014; 2(6):296-302. doi: 10.12691/wjar-2-6-9

Abstract

Market is the main arbiter of how the available food is distributed both within and between countries. Food price volatility informs consumers and price analysts on the availability of food in the region. Food price surges reduce purchasing power of households that are weekly linked to markets and remain obstacle in the way to feed the poor adequately. Thus, Food price surges lead poor people to limit their food consumption and shift to even less-balanced diets, with harmful effects on health in the short and long run. Applying a Vector Autoregressive Model that combines monthly price information on Sorghum, Maize, Rice, Wheat, Irish Potato, and Beans from January, 2007 to December, 2013, this paper tries to forecast food prices volatility in Rwanda and to find out which food commodities’ price volatility granger cause price volatility in the other food commodities. In the light of the government of Rwanda efforts aimed to ensure food security to its population, food price volatility could capture the attention of the government of Rwanda. Therefore, food price policies should be oriented to the stabilization of price of food commodities which price volatility granger cause price volatility in the other food commodities.

Keywords:
food prices volatility granger causality and food prices impulse responses

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