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Nonlinearities in price convergence among Mercosur countries

Author

Listed:
  • Juan Carlos Cuestas

    (Nottingham Trent University)

  • Javier Ordoñez

    (Universitat Jaume I)

Abstract

The aim of this paper is to analyse the existence of price convergence in Mercosur. Two variables are considered, Consumer Price Indices to assess convergence in the goods and services markets and real interest rates, to analyse convergence in the money markets. For this purpose we have applied Kapetanios, Shin and Snell (2003) nonlinear unit root test, in order to take into account asymmetric speed of mean reversion, and Bierens (2000) co-trending analysis. The univariate analysis points only to convergence in real interest rates, whilst the multivariate analysis provides evidence of common trends in both markets.

Suggested Citation

  • Juan Carlos Cuestas & Javier Ordoñez, 2009. "Nonlinearities in price convergence among Mercosur countries," Economics Bulletin, AccessEcon, vol. 29(1), pages 150-161.
    • Handle: RePEc:ebl:ecbull:eb-08c20080
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    More about this item

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • F3 - International Economics - - International Finance

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