Study on the Effectiveness of Government Regulation of China's Grain Market: A Case Study of Wheat. (In Chinese. With English summary.)

Abstract

To evaluate how effective Chinese government regulation is on the domestic grain market under world economic integration, we conducted a series of tests. There included unity root test, VAR, GARCH model, variance decomposition, co-integration test, together with volatility analysis to test daily data of the domestic and foreign wheat market from January 2001 to September 2007 and test monthly data of spot and futures of domestic and foreign wheat from June 1993 to March 2007. The results reveal some interesting features unique to China's wheat market. In particular, This paper substantiates that the absence of long-term equilibrium between domestic and foreign market can be maintained is the premise for using effective government regulation. Therefore, a standard is necessary for judging the necessity of regulation so as to avoid the negative effects and harm caused by inadvertent government regulation.