<!-- Start of picture text --> Filtered vs Normal Price Series: Growth RatesKerala, Trivandrum: Coconut Oil Filtered vs Normal Price Series: Growth RatesKarnataka, Bangalore: Rice<br>Domestic Domestic<br>International International<br>Note: Smoothed series are estimated using Christiano‐Fitzgerald band‐pass filter<br>Source: Author’s calculations<br>1 1<br>.5 .5<br>0 0<br>-.5 -.5<br>1 1<br>.5 .5<br>0 0<br>-.5 -.5<br>2006m1 2007m1 2008m1 2009m1 2010m1 2011m1 2012m1 2013m1 2014m1 2015m1 2006m1 2007m1 2008m1 2009m1 2010m1 2011m1 2012m1 2013m1 2014m1 2015m1<br><!-- End of picture text --> The timing with which these “boom” and “bust” international price cycles are transmitted to domestic markets matter since the commodities in question are an important element in the consumption basket of poor Indian households. To identify the average transmission time that “busts” (troughs) take to transmit to domestic retail prices we use standard time series filters. Figure 10 plots these results for the four commodities for which domestic retail prices can be mapped to international prices (groundnut oil, rice, bananas and coconut oil).<sup>9</sup> These charts plot the extent of transmission in the vertical axis (the portion of the shock that is actually transmitted), and the time it takes for the trough to transmit (international to domestic trough distance in months). Results show that on average it takes five to fourteen months for international troughs to transmit, with substantial heterogeneity by city. Interestingly, the time it takes for shocks to transmit is independent of the portion of the shock that is passed through to domestic prices.

Figure 10: Time it takes for international troughs to transmit to domestic markets <!-- Start of picture text --> Groundnut Oil Rice<br>Raja Karn<br>Raja<br>KeraAPraTNadMaha RajaPunj UPraDelhiKarnRajaAPraRaja APra PunjAPraTNadTNadKeraUTMPraKarnGu Bihar MeghWBenKerajaTNadUPra HaryAPraRaja TNadRajaAPra UPra MeghAPra NagaMPra HaryRaja Jhar UTKarnGujaMizoMaha OrisHary UPraWBenHPra APraKarn Bihar Punj DelhiKeraUPraTpurAPraGoa APra KeraPunjJKasTNadTNad WBen TNad Kera OrisUPra<br>0 5 10 15 20 0 5 10 15 20<br>Average International to Domestic Trough Distance in Months Average International to Domestic Trough Distance in Months<br>Bananas Coconut Oil<br>Megh<br>Raja<br>MizoKeraTNadWBenAPraMPraTNadUPraAPraRajaRajaTNadUPra JharRaja JKasHaryOrisDelhiPunjHPra UPraHaryKeraNaga APra Raja APraKeraAPraPunjTpurUT MahaGoa Bihar Delhi Karn APra Raja BiharHaryMahaAPraTpur KeraKera Goa Guja TNadAPraPunjPunjWBenKeraKarn APra UPraTNadTNad Oris UT UPra MPra<br>TNad<br>0 5 10 15 20 0 5 10 15 20<br>Average International to Domestic Trough Distance in Months Average International to Domestic Trough Distance in Months<br>Source: Authors’ calculations<br>.25 .25<br>.2 .2<br>.15 .15<br>.1 .1<br>.05 .05<br>0 0<br>.25 .25<br>.2 .2<br>.15 .15<br>.1 .1<br>.05 .05<br>0 0<br><!-- End of picture text --> 9 These four products matter in the consumption basket of Indian households. For example, rice accounts for 6.6 percent of the consumption of non‐poor households and 9.2 percent of that of poor households. Bananas, for about half of a percent for both types of households, and groundnut and coconut oil combined, for 4.95 percent among non‐poor households and 5.5 percent for poor households.

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