An Analysis of Market Cycle for Thai Cassava Chips

Abstract

This paper uses monthly data to examine factors affecting supply and demand, explore the time-varying magnitude effects of supply and demand, and clarify the market cycle for Thai cassava chips between January 2009 and December 2019, analyzed by using the Markov switching state-space model. The result shows that none of the variables affected the demand for cassava chips, while the amount of rainfall and yield of cassava roots in the previous month affected the supply of cassava chips. The price of substitution goods in regime 1 (downward market) and the GDP per capita of China in regime 2 (upward market) affected the time-varying of demand. The planting area, the amount of rainfall, the yield and the price of cassava root in the previous month affected the time-varying supply in regime 1. In regime 2, the planting area, the amount of rainfall and the yield of cassava roots in the previous month affected the time-varying supply. Moreover, the result is able to clarify the business cycle very well.