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Spatial Integration Of Mexico And United States In Grain Market: The Case Of Maize, Wheat And Sorghum

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  • Jaramillo, Jose Luis
  • Yunez-Naude, Antonio
  • Serrano-Cote, Valeria
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    Abstract

    Based on agricultural trade liberalization that the Mexican governments began to implement in early 1990s and increasing agricultural trade flows in North America, in this paper we show empirically that trade liberalization between Mexico and United States (U.S.) under the North American Free Trade Agreement (NAFTA) has implied structural change in prices received by Mexican producers of maize, sorghum and wheat, and that this has been accompanied by price convergence with U.S. prices of these crops. Using data on Mexico and U.S. prices from 1981 to 2010, the study provides evidence that trade liberalization has led to greater integration of Mexico-U.S. agricultural markets, specifically of the three major food-crops produced in Mexico, evidenced by the existence of a long-term relationship between the price series analyzed, greater flows of trade, and an increase in the speed of adjustment of domestic prices in response to changes in international prices.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 126495.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:126495

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    Related research

    Keywords: markets; price convergence; structural change; grains; Agricultural and Food Policy; Crop Production/Industries; Demand and Price Analysis; Marketing; Q 18; F 13;

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    1. Vollrath, Thomas L., 2003. "North American Agricultural Market Integration And Its Impact On The Food And Fiber System," Agricultural Information Bulletins 33639, United States Department of Agriculture, Economic Research Service.
    2. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    3. Antonio Yunez--Naude, 2003. "The Dismantling of CONASUPO, a Mexican State Trader in Agriculture," The World Economy, Wiley Blackwell, vol. 26(1), pages 97-122, January.
    4. Hamilton, James D. & Susmel, Raul, 1994. "Autoregressive conditional heteroskedasticity and changes in regime," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 307-333.
    5. Thomas Vollrath & Charles Hallahan, 2006. "Testing the Integration of U.S.-Canadian Meat and Livestock Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(1), pages 55-79, 03.
    6. Baffes, John & Ajwad, Mohamed I., 1998. "Detecting price links in the world cotton market," Policy Research Working Paper Series 1944, The World Bank.
    7. Christopher B. Barrett & Jau Rong Li, 2002. "Distinguishing between Equilibrium and Integration in Spatial Price Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 292-307.
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