Price transmission in the Hungarian pork market

Abstract

This study examines price transmission dynamics in the Hungarian pork market from 2017 to 2023, focusing on the effects of price controls implemented to combat inflation. Inflation and price control policies have been central topics in economic research due to their significant impacts on market behavior and consumer welfare. Utilizing linear and nonlinear cointegration approaches, we explore how these regulatory interventions influence producer and consumer price relationships. Our findings reveal persistent asymmetry in long-term price transmission, with producer price increases having a greater impact on consumer prices than decreases, highlighting delayed and partial adjustments to price fluctuations. Short-term dynamics, however, show no such asymmetry. Additionally, our analysis indicates that price pressures originate primarily from the consumer side, as consumer prices have a causal effect on producer prices. These results provide novel insights into the role of regulatory measures, like price controls, in shaping market dynamics under inflationary pressures.