Testing for spatial market integration: evidence for Colombia using a pairwise approach |
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Authors: | Ana María Iregui Jesús Otero |
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Affiliation: | 1. Unidad de Investigaciones, Banco de la República, Bogotá, Colombia;2. Facultad de Economía, Universidad del Rosario, Bogotá, Colombia |
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Abstract: | We examine the extent of spatial market integration in Colombia using consumer price index data for 153 consumer goods in 13 cities. An econometric analysis of the time‐series properties of all the possible city price differentials reveals that market integration tends to occur more frequently in unprocessed food products, as opposed to processed foods, other traded and nontraded products. The results also support the view that, except for nontraded products, the speed at which prices adjust to the long‐run equilibrium is slower for cities that are farther apart. |
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Keywords: | C33 E31 Q11 Law of one price Pairwise Distance Colombia |
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