Further Empirical Evidence of Wheat and Barley Market Integration in the Eu

Integration in the EU wheat and barley markets is studied using monthly price series for the 1980-1994 period. The methodology expands previous work on cointegration modeling by testing market integration constraints on the cointegration space; these tests are also supplemented with an evaluation of the short-run dynamics by testing for causality and calculating forecast-error variance decompositions. This adds to previous work which have suggested that cointegration is a necessary but not sufficient condition for market integration. Results are consistent with the self-sufficiency nature of cereal markets in the EU. Prices appear to follow each other in the long-run with more than one stochastic trend. France exerts a leadership in cereal prices as a result of being the main exporter. FURTHER EMPIRICAL EVIDENCE OF WHEAT AND BARLEY MARKET INTEGRATION IN THE EU JOSÉ M. GIL. Unidad de Economía Agraria, SIA-DGA, Zaragoza (Spain). ANA M. ANGULO (corresponding author). Departamento de Análisis Económico. Facultad de Ciencias Económicas y Empresariales. C) Doctor cerrada, 3. 50.005 Zaragoza (Spain). HÉCTOR O. ZAPATA. Department of Agricultural Economics, Louisiana State University (USA).