Assessing the Impact of Cereal Prices on Consumer Price Index in Mali

Coulibaly Abdoulaye^1, , Wang LanHui¹ and Mukete Beckline²

¹School of Economics and Management, Beijing Forestry University, 35 Qinghua East Road, Haidian District Beijing, China

²School of Forestry, Beijing Forestry University, 35 Qinghua East Road, Haidian District Beijing, China

Cite this paper:
Coulibaly Abdoulaye, Wang LanHui and Mukete Beckline. Assessing the Impact of Cereal Prices on Consumer Price Index in Mali. Journal of Finance and Economics. 2015; 3(6):112-121. doi: 10.12691/jfe-3-6-2

Abstract

This study examines the relationships between cereal prices and consumer price index (CPI) in Mali. Using monthly series of consumer price indexes from 1993 to 2014, Vector Error-Correction Model (VECM) was estimated in a co-integration analysis. This was in order to investigate the short and long-term dynamics and mechanisms of cereal prices. Results indicated that, a statistically significant long-run equilibrium relationship exists between consumer price index and those of the main variable inputs consumed, such as rice, corn and wheat. It also showed that, there existed a negative long-run relationship between CPI and the variables except for millet-sorghum prices. Furthermore, all the error correction terms were negative and significant. Despite these, there was no short run causality between them except for the millet-sorghum equation. There was short run causality from millet-sorghum to those variables such as CPI, rice, corn and wheat prices. The parsimonious VEC model suggests that, the dynamics of cereal prices market systems are linked to the process of changing CPI.

Keywords:
consumer prices index cereal prices inflation co integrations and VEC model

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