Analysis Of Volatility, Market Integration And Transmission Of Red Chili Prices In North Sumatra Province, Indonesia

Abstract

Red chili is a high economic and strategic commodity in North Sumatra. High price fluctuations cause losses for producers and consumers due to rapid price changes, so a fast flow of information is needed. The existence of a large price difference between the price of red chili producers and consumer prices indicates that the volatility of red chili prices is due to differences in distribution costs. The purpose of this study is to analyze the volatility of red chili prices, analyze the integration of the red chili market and analyze the transmission of red chili prices. The analysis method used in this study uses the ARCH / GARCH method to analyze the volatility of red chili prices, the VECM (Vector Error Correction Model) method to analyze the integration of the red chili market, and the AECM (Asymmetric Error Correction Model) to analyze the transmission of red chili prices in North Sumatra Province. The results of this study are low producer and consumer prices due to low producer and consumer price volatility. In the short term, there are several levels of market prices that are not integrated, but in the long term, there is integration between producer and wholesale markets. The producer price of red chili is directly transmitted to the consumer price of red chili in North Sumatra Province in the long run. On the other hand, wholesale and consumer prices of red chili are directly transmitted to producer prices in the short run.