Horizontal Price Transmission in Agricultural Markets: Fundamental Concepts and Open Empirical Issues

Following the dramatic changes experienced by the prices of agricultural commodities in 2007-2008, the analysis of horizontal price transmission mechanisms in agricultural markets has attracted renewed interest. In particular, this has led to the emergence of new challenges for the empirical analysis. How to model the increasing volatility and non linear behaviour of prices, to assess the impact of the policy responses to market turbulence, and how to account for the increasing interconnections between agricultural and non-agricultural commodity markets are amongst the most investigated issues. Building on a common analytical framework, this paper discusses and reviews the most recent methodological developments and empirical contributions in the field.