Examining Trade Liberalisation and Food Price Volatility in India using ARCH & GARCH Models.

Trade liberalisation has been promoted by various international institutions such as WTO, IMF d World Bank on the presumption that openness to trade will contribute to economic growth and development which would lead to an increase in domestic income, reduction in poverty and improvement in food security. The paper seeks to examine empirically the effect of trade liberalisation on food price volatility using monthly price indices time series data of food and beverages for the period from 2013-2022.The food price volatility is estimated using ARCH and GARCH models. The estimated results of AR (1) indicate that the coefficients of beverages, cereal, oil, preparatory food, pulse, and spices are significant and the coefficient of egg, fruit, meat, milk, sugar and vegetables are statistically insignificant. While the GARCH model shows the presence of long-term persistence in volatility in cereal, fruit, oil, pulse, sugar and vegetables whereas beverages, egg, meat, milk, preparatory food and spices show insignificant results. The outcomes fail to support the view that long term effect of trade liberalisation on food prices of cereal, fruit, oil, pulse, sugar and vegetable items is favourable. [ABSTRACT FROM AUTHOR]