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Unilateral reforms, trade blocs, and law of one price: MERCOSUR rice markets
Author(s) -
Bierlen Ralph,
Wailes Eric J.,
Cramer Gail L.
Publication year - 1998
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/(sici)1520-6297(199805/06)14:3<183::aid-agr2>3.0.co;2-x
Subject(s) - cointegration , economics , tariff , law of one price , international economics , international trade , macroeconomics , price level , econometrics , mid price
The current study tests for the law of one price (LOP) in MERCOSUR rice markets and between the MERCOSUR and major rice exporters in the light of recent Argentinean and Brazilian unilateral reforms and regional integration. Johansen's multivariate cointegration testing procedures support the existence of the LOP in both instances in the post‐ (but not the pre‐) unilateral reform and regional integration period. This is consistent with the notion that bloc and nonbloc members can both enjoy the benefits of unilateral reforms by a bloc member when the external bloc tariff is not prohibitive. © 1998 John Wiley & Sons, Inc.