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After a period of growing disconnectedness of regional markets following the 1992 price liberalization in Russia, a process of improvement in market integration started since about 1994. This paper analyzes the spatial pattern of goods market integration in the country in 1994-2000, characterizing Russian regions into three states: integrated with a benchmark region, not integrated but tending toward integration with it, and not integrated and not tending toward integration. The standard AR (1) model serves to test for market integration. To capture a movement toward integration (price convergence), a nonlinear time series model with an asymptotically decaying trend is proposed.
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