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Abstract
Over the last decade, Mozambique has experienced drastic increases in food prices, with
serious implications for households’ real income. A deeper understanding of how food prices
are spatially transmitted from global to domestic markets is thus fundamental for designing
policy measures to reduce poverty and food insecurity. This study assesses the spatial
transmission of white maize prices between South Africa and Mozambique using an
asymmetric error correction model to estimate the speed and symmetry with which prices are
being transmitted from the international to the domestic market. The study found that
although the transmission of white maize prices from South Africa and Mozambique is cointegrated
in the long run, it is not co-integrated in the short run, and that the transmission of
these prices is asymmetric depending on whether the international price increases or
decreases. The study suggests that some of the barriers that currently constrain a more
efficient price transmission are related to the presence of a highly prohibitive import tariff
and the structure of a value added tax.