Abstract: Irish potatoes is one of the most preferable foods produced and consumed by Rwandans, the fact that its price fluctuates famers suffer from the decrease of price that bring them a loss. This work contribute on the forecasting the volatility using GARCH models with nine (9) years (from January 2007 to May 2015) daily data on price of Irish potatoes, price of fertilizers (NPK ), price of pest ( dithan ) and exchange rate (Rwf/Usd) to forecast the volatility of price of Irish potatoes, that will help alert farmers to be aware of the fluctuation of price of Irish potatoes in the studied areas. The methodology of this work is Generalized Auto-Regressive Conditional Heteroscedasticity GARCH and Vector Error Correction Model VECM to study and forecast the volatilities of price of Irish potatoes. In the study GARCH model is used to forecast the fluctuation of price of Irish potatoes. VECM cannot be used because the considered series are not correlated with fluctuation of price of Irish potatoes in the studied areas. Farmer are advised to work in cooperative so that they may look for market as team in time of harvest, they are also advised to look means haw they can store the harvest in time of price fall. Future researchers may look for other financial series that granger cause the fluctuation of Irish potatoes and use them in restricted auto regressive model to test their long run causality with volatility of price of Irish potatoes.
Keywords: Price of Irish potatoes, GARCH model, VEC Model, Volatilities, Forecasting.
Title: Forecasting Price of Irish Potatoes Volatility Using GARCH and VECM Models in Rwanda
Author: Nsabimana Innocent, Joseph Kyalo Mung’atu, Kigabo Thomas
International Journal of Thesis Projects and Dissertations (IJTPD)
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