THE RELATIONSHIP BETWEEN PRODUCTION PRICES, CONSUMER PRICES AND IMPORT PRICES OF AGRICULTURAL PRODUCTS – EVIDENCE FROM KOSOVO

Abstract

This paper examines the relationship between harmonized CPI which means
Consumer Price Index, agricultural producer price index (APPI) and import prices for
agricultural products in Kosovo. The data utilized in this study were sourced from the
Kosovo Agency of Statistics, comprising monthly time series data spanning from
January 2015 to December 2022. The research employed various statistical
techniques, including unit root tests, cointegration analysis, and a vector error correction
model. These methods were applied to analyze the interrelationships among three
variables: the Agricultural Producer Price Index (APPI), the Harmonized Consumer
Price Index (HCPI), and import prices for agricultural products. Additionally, a Granger
causality analysis was conducted to assess any potential causal relationships among these
variables. The results showed that HCPI causes APPI, but APPI does not cause HCPI;
import causes APPI but APPI does not cause import. Finally, import does not cause
HCPI, but HCPI causes import. The paper concludes with relevant policy
recommendations.