publication . Article . 2007

Regional and International Market Integration of a Small Open Economy

Cesar M. Rodriguez; Fernando Lorenzo; Sebastian Fossati;
Open Access
  • Published: 01 Jan 2007 Journal: Journal of Applied Economics, volume 10, pages 77-98 (issn: 1514-0326, eissn: 1667-6726, Copyright policy)
  • Publisher: Informa UK Limited
Abstract
This paper studies the relationship between a set of commodity prices in a small open economy like Uruguay and the corresponding international and regional prices. The empirical methodology used is the multivariate cointegration procedure based on maximum likelihood methods introduced by Johansen (1988) as well as estimations of half-life persistence indicators. In the case of cereals, the evidence suggests strong market integration between domestic and regional markets and, to some extent, also to international markets. Therefore, directly or indirectly, domestic prices are connected with the efficient price signal. Results for beef indicate strong market integ...
Subjects
free text keywords: General Economics, Econometrics and Finance, commodity prices, law of one price, market integration, cointegration, Financial economics, Order (exchange), Domestic market, Price mechanism, Market depth, Economics, Factor market, Small open economy, Market price, Market integration, jel:C5, jel:F15, jel:Q11
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