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Food price convergence in Canada: A nonparametric nonlinear cointegration analysis

Author

Listed:
  • Kai Yin Woo

    (Department of Economics and Finance, Hong Kong Shue Yan University)

  • Shu Kam Lee

    (Department of Economics and Finance, Hong Kong Shue Yan University)

  • Alan T. Y. Chan

    (Department of Business Administration, Crandall University)

Abstract

Canada has paid great efforts to reduce interprovincial trade barriers in order to establish an integrated local economy. In order to assess the cross-border movements of goods across provinces and territories, this paper examines the price index convergence of food products within Canada from 1997 to 2016. Since the cointegrating relationship between food product prices may not be exact or linear, we adopt the rank tests for analysis which do not require prior knowledge and specification of the linear or nonlinear functional form. Our results validate the price convergence of all food products under study within Canada and show that government initiatives are effective. Furthermore, a subset of the cointegration relationships exhibits nonlinear long-run price co-movements.

Suggested Citation

  • Kai Yin Woo & Shu Kam Lee & Alan T. Y. Chan, 2020. "Food price convergence in Canada: A nonparametric nonlinear cointegration analysis," Economics Bulletin, AccessEcon, vol. 40(3), pages 2361-2371.
    • Handle: RePEc:ebl:ecbull:eb-19-00797
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    References listed on IDEAS

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    More about this item

    Keywords

    nonlinear; nonparametric; rank tests; Canada; food price convergence; law of one price;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • F3 - International Economics - - International Finance

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