Qian Lu
College of Economics and Management, Northwest A&F University

This paper using monthly data from February 2006 to March 2011, empirically studies the relationship between domestic and international rice markets on price volatility and their transmission effect by using error correction model and VAR model. The results show that, in the long term, fluctuation in the price of domestic rice is caused mainly by inflation. In the short term, the variability of world rice price is the Granger cause of domestic rice fluctuation. When domestic rice price deviate from equilibrium price by suffering some distraction, then it will converge towards equilibrium state by an opposite force. World rice price affects domestic rice price through foreign trade and futures way, and futures way has a more prominent transmission effect to domestic rice price.
Key words: rice; international market; price fluctuation; transmission effect