Price level co-movements within Preferential Trade Agreements (PTAs)

Research output: Working paperWorking paper series

Abstract

This paper tests for a common stochastic trend among the price levels of a PTA's member countries by testing for cointegration among the price levels. The first part of the paper tests directly for cointegration by examining the PTA as a whole (multilateral analysis). The second part tests for cointegration among all country pairs that comprise the PTA (bilateral analysis). This conceptualization permits the creation of a novel control group to verify the implication of the earlier results: the set of all country pairs where exactly one country belongs and exactly one country does not belong to the PTA in question: "pseudo" PTAs. Comparing the share of country pairs exhibiting cointegration in the true PTA with the share of country pairs exhibiting cointegration in the pseudo PTA provides a control group against which to gauge the extent of cointegration within the PTA as "high" or not.
Original languageEnglish
Number of pages76
Publication statusIn preparation - 14 May 2016

Fingerprint

Preferential trade agreements
Comovement
Price level
Cointegration
Conceptualization
Common stochastic trends
Bilateral
Testing

Keywords

  • Trade Agreement
  • Inflation
  • Integration

Cite this

@techreport{c1bdfd48612f4ee3952882d5879474a3,
title = "Price level co-movements within Preferential Trade Agreements (PTAs)",
abstract = "This paper tests for a common stochastic trend among the price levels of a PTA's member countries by testing for cointegration among the price levels. The first part of the paper tests directly for cointegration by examining the PTA as a whole (multilateral analysis). The second part tests for cointegration among all country pairs that comprise the PTA (bilateral analysis). This conceptualization permits the creation of a novel control group to verify the implication of the earlier results: the set of all country pairs where exactly one country belongs and exactly one country does not belong to the PTA in question: {"}pseudo{"} PTAs. Comparing the share of country pairs exhibiting cointegration in the true PTA with the share of country pairs exhibiting cointegration in the pseudo PTA provides a control group against which to gauge the extent of cointegration within the PTA as {"}high{"} or not.",
keywords = "Trade Agreement, Inflation, Integration",
author = "WHITTEN, {Gregory W.}",
year = "2016",
month = "5",
day = "14",
language = "English",
type = "WorkingPaper",

}

Price level co-movements within Preferential Trade Agreements (PTAs). / WHITTEN, Gregory W.

2016.

Research output: Working paperWorking paper series

TY - UNPB

T1 - Price level co-movements within Preferential Trade Agreements (PTAs)

AU - WHITTEN, Gregory W.

PY - 2016/5/14

Y1 - 2016/5/14

N2 - This paper tests for a common stochastic trend among the price levels of a PTA's member countries by testing for cointegration among the price levels. The first part of the paper tests directly for cointegration by examining the PTA as a whole (multilateral analysis). The second part tests for cointegration among all country pairs that comprise the PTA (bilateral analysis). This conceptualization permits the creation of a novel control group to verify the implication of the earlier results: the set of all country pairs where exactly one country belongs and exactly one country does not belong to the PTA in question: "pseudo" PTAs. Comparing the share of country pairs exhibiting cointegration in the true PTA with the share of country pairs exhibiting cointegration in the pseudo PTA provides a control group against which to gauge the extent of cointegration within the PTA as "high" or not.

AB - This paper tests for a common stochastic trend among the price levels of a PTA's member countries by testing for cointegration among the price levels. The first part of the paper tests directly for cointegration by examining the PTA as a whole (multilateral analysis). The second part tests for cointegration among all country pairs that comprise the PTA (bilateral analysis). This conceptualization permits the creation of a novel control group to verify the implication of the earlier results: the set of all country pairs where exactly one country belongs and exactly one country does not belong to the PTA in question: "pseudo" PTAs. Comparing the share of country pairs exhibiting cointegration in the true PTA with the share of country pairs exhibiting cointegration in the pseudo PTA provides a control group against which to gauge the extent of cointegration within the PTA as "high" or not.

KW - Trade Agreement

KW - Inflation

KW - Integration

M3 - Working paper series

BT - Price level co-movements within Preferential Trade Agreements (PTAs)

ER -