We study the impact of post-election ethnic violence in Kenya on the wheat and maize market in Mombasa and find empirical evidence that for these food markets, there is no impact on prices following violence. Using a data set of a flour producing firm, we identify the degree of persistence in prices and quantities by means of techniques based on long memory and long range dependence. Prices are found to be highly persistent in both wheat and maize flour, with orders of integration which are around one or even above one. On the contrary, quantities, though also persistent, appear to be fractionally integrated, with orders of integration in the interval (0, 0.5) pointing towards stationarity, long memory and mean reverting behaviour. Violence is associated with an insignificant increase in prices of both products and a significant decrease in quantities. An external validity check on the impact of post-election ethnic violence on food prices in Nigeria yields consistent results.
The Impact of Ethnic Violence in Kenya in Wheat and Maize Markets
Luis A. Gil-Alaña
Journal of African Economies, Vol. 24, Issue 4