run effect of export restrictions is likely less straightforward. As farmers respond to disincentives and start reducing investment on agriculture inputs or switch to other crops, the national production, and supply to markets might decrease over time. As a result, such long-run supply adjustments could defeat the purpose of the market intervention and possibly exacerbate food insecurity.

The most common methodological approach for analyzing trade policy effects is the use of time-series techniques to measure the impact of such policies on prices.<sup>1</sup> Many of the studies using these methods focus on the impact of trade restrictions on price transmission across countries or markets within a country. Other studies extended these methods to examine the effects on price volatility as well. The law of one price (LOP) motivates much of the price analysis literature. Under LOP, for a homogenous product with many small agents in the market, assuming perfect information, no lags in trading and no policy barriers to trade, the equilibrium condition across two markets that trade the good would be i (1) jjii iijjii with i as the price in market (the origin market) at time PP −PP = CC , being the price in the destination market , and is the full cost of transacting (includes transportation, duties, and markups) between market jjii PP jj tt PP and . In this situation, when the two market prices are in equilibrium, any movements in the price of the iijjii jj CC ii good in one market will show up in the form of equivalent changes in price in the other market, implying jj co-movement or integration in the prices (Minot, 2011). The assumption underlying the study of price transmission is that co-movement in prices across different markets (measured through estimating the longrun cointegration) is interpretable as a sign of efficient, competitive markets. In contrast, the absence of comovement indicates the presence of market failures. Impediments to trade such as lack of infrastructure, high transportation costs, imperfect information as well as regulatory barriers are expected to result in a lower degree of price transmission.

A primary concern for policymakers and researchers after the 2007-08 food price spike was to understand the degree to which world prices transmit to domestic grain markets in African countries, many of whom were dependent on food imports. One of the early studies examining this question used agricultural monthly market price data from 62 markets in 11 African countries and applied an error correction model to estimate the price transmission between world prices to these markets (Minot, 2011). The market price data included a mix of retail and wholesale prices, and the results suggested that rice markets in Africa were more closely linked to world prices, while only 10 percent of the maize markets were found to show co-integration with world prices. In particular, for Malawi, the author finds that the price increases for rice and maize during 2007-08 was the highest amongst the sample of southern African countries in the study. In terms of links to world prices, three out of the eight markets considered in Malawi exhibited a significant long-run integration with world maize prices. These markets were: Chitipa (located in the north, close to maize regions in Tanzania), Lilongwe (the capital city) and Nkhata, a principal port on the coast of Lake Malawi (Minot, 2011); all of which are likely to be the leading trade markets for maize in Malawi.

> 1 Several studies have also employed computable general equilibrium (CGE) models and their variants to estimate the effect of trade policies changes on welfare outcomes in various contexts (Sadoulet and de Janvry (1992), Minot and Goletti (1998), Nouve and Wodon (2008), Arndt et al. (2008), Dorosh, Dradri and Haggblade (2009), Xinshen and Kennedy (2016), and Aragie, Pauw and Pernechele (2018).

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