The Impact of Agricultural and Trade Policies on Price Transmission in Central Asia

This paper investigates the market integration between international and domestic markets in the case of two-transition countries namely Tajikistan and Uzbekistan. More specifically, our study aims to understand the extent and speed of price transmission from international to local market. We have used cointegration techniques to analyse the price transmission mechanism, such as a vector error correction model (VEC). We have found strong cointegration evidences between world market and domestic market of Tajikistan while no cointegration was observed in case of Uzbekistan. Tajikistan has liberal trade while Uzbekistan frequently used protectionist trade policy