Market Openness and Price Volatility- Evidence from Maior Cash Crops of India

Abstract

This pap er empirically analyzes the impact of market openness on major cash crops of India . Liberalization in agriculture can beacceptable only if developing countries can be convince d of its benefits as this sector provides food security and livelihood to la rgesections. This study takes a different approach to model volatility af agricultural crop prices facing farmers using time series modelsto enquire wh ether trade lib eralization ha s indeed increased unpredictability of prices . The GARCH models were found to performwell in forecasting volatility, but food crops did not show any significant si gn in this direction though two commercial crops werefound to have shown increased volatility.