Template-type: ReDIF-Paper 1.0
Author-Name: Alfredo García-Hiernaux
Author-Email: agarciah@ccee.ucm.es
Author-Homepage: https://www.ucm.es/fundamentos-analisis-economico2/garcia-hiernaux,-alfredo
Author-Person: phi35 
Author-Workplace-Name: Departamento de Economía Cuantitativa (Department of Quantitative Economics), Facultad de Ciencias Económicas y Empresariales (Faculty of Economics and Business), Universidad Complutense de Madrid
Author-Workplace-Homepage: https://www.ucm.es/fundamentos-analisis-economico2
Author-Name: David E. Guerrero
Author-Email: dguerrero@cordes.org
Author-Person: pgu285 
Title: Convergence and Cointegration
Abstract: This paper provides a new, uni¯ed, and °exible framework to measure and
	characterize convergence in prices. We formally de¯ne this notion and propose a
	model to represent a wide range of transition paths that converge to a common
	steady-state. Our framework enables the econometric measurement of such transi-
	tional behaviors and the development of testing procedures. Speci¯cally, we derive
	a statistical test to determine whether convergence exists and, if so, which type: as
	catching-up or steady-state. The application of this methodology to historic wheat
	prices results in a novel explanation of the convergence processes experienced during
	the 19th century.
Classification-JEL: C22, C32, N70, F15
Keywords: Price convergence, cointegration, law of one price.
Length: 25 pages 
Creation-Date: 2011 
Number: 2011-22
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae1122.txt
File-URL: https://eprints.ucm.es/id/eprint/12874/1/1122.pdf
File-Format: Application/pdf
File-Function: June 9, 2011
Handle: RePEc:ucm:doicae:1122