Impact of import price on domestic producer's price of rice in Nepal: A study using NARDL model

초록

Rice trade remains small, with only 6–7 % of global production being traded internationally. This feature of rice world market results in greater price volatility and abrupt increase in prices which affects the poorest countries in the world like Nepal. This study intends to find whether rice import price has impact on the domestic producer's price of rice in Nepal by analyzing the asymmetric relationship between the two prices using Non-linear Autoregressive distributed lag (NARDL) model for the period of 1981–2023. The results show the instability of parameters and existence of multiple structural breaks around year 1996 and 2008 possibly due to mixed effect of Maoist insurgency, deregulation of fertilizer subsidy and re-enforcement of revised fertilizer subsidy policy and global food crisis. This suggests possibility of asymmetric condition or non-linear relationship between the two prices. Further investigation confirmed non-linear cointegration and existence of significant long-run asymmetry between the two prices of rice with higher magnitude of long run effect for positive change than negative change in import price. Overall, the results reflected the inefficiency of the market. Policy recommendations like input policy stability, import diversification and trade risk management, import substitution with productivity growth, price stabilization and institutional coordination are suggested to reduce market inefficiency. © 2025 Elsevier B.V.

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