The Grain Price Pass-through Effect Under The "Support Policy"

Grain price forming mechanism of the sound is the critical reason for the normal operation of grain market,grain price effective transfer is the primary guarantee for normal operation of the food price forming mechanism.Our grain markets' degree of opening increases gradually,but in view of the particularity of grain,and grain market main parts are not yet mature,the government implemented by the minimum purchase price policy and store policy of "support policy",there is a policy control in the grain purchasing price and grain reserves.The controls for the effectiveness of the food price transfer inevitably caused some interference,and produced a violation of the law of market “Three Quantity's Increase”phenomenon,namely food production,inventory,and imports increased at the same time.Firstly this article conduct a preliminary analysis of the phenomenon of “Three Quantity's Increase”,then we offer two hypotheses from the prospect of the grain price pass-through.Based on monthly price data of wheat,rice and corn from 2005 to 2014,we mainly use cointegration analysis,VAR model,VECM model and BEKK model to analyze grain price pass-through effect between different markets.Then we discuss price pass-through effect under the “Support Policy”.In the first part of the empirical analysis,we manly use the VECM model and BEKK model to analyze grain mean price pass-through effect and volatility spillover effect between different levels of grain market,and then a concrete analysis of price transfer effect under the "support policy".In the second part of the empirical analysis,we mainly use VAR and BEKK model to analyze grain mean price pass-through effect and fluctuant pass-through effect at home and abroad,and combining the price trend diagram analysis "to support policy" to stabilize the domestic grain price.We found that purchasing price is kernel variable that has significant impact on wholesale price and retail price;wheat and rice have invalid price pass-through effect,while pass-through effect of corn is remarkable;there is a significant volatility spillover effect between domestic and foreign markets;spillover effect can explain the phenomenon of “Three Quantity's Increase”.