%0 Report
%A García Hiernaux, Alfredo
%A Guerrero, David
%T Convergence and Cointegration
%J Documentos de Trabajo del Instituto Complutense de Análisis Económico (ICAE)
%D 2011
%U https://hdl.handle.net/20.500.14352/49011
%X This paper provides a new, united, and flexible framework to measure and characterize convergence in prices. We formally define 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.
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