Testing the Law of One Price on Exports of Tropical Forest Products: A Co-integration Approach
Trade theory often postulates the existence of a representative price, that is, a single price that prevails in all markets. This is known as the Law of One Price (LOP). In this paper the empirical validity of LOP was tested using the recently developed co-integration method for timber exports. Mo...
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Universiti Putra Malaysia Press
1995
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my.upm.eprints.30832013-05-27T07:05:36Z http://psasir.upm.edu.my/id/eprint/3083/ Testing the Law of One Price on Exports of Tropical Forest Products: A Co-integration Approach Baharumshah, Ahmad Zubaidi Habibullah, Muzafar Shah Trade theory often postulates the existence of a representative price, that is, a single price that prevails in all markets. This is known as the Law of One Price (LOP). In this paper the empirical validity of LOP was tested using the recently developed co-integration method for timber exports. Monthly data for the period January 1985 to December 1992 were used to analyse the long-run equilibrium relationship. Empirically, we found the exchange rate pass-through on the exports to be complete for all timber products and markets. The results obtained suggest that the data are consistent with the LOP as a long-run relationship. We conclude that the markets for tropical forest products are generally competitive. Universiti Putra Malaysia Press 1995 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/3083/1/Testing_the_Law_of_One_Price_on_Exports_of_Tropical_Forest.pdf Baharumshah, Ahmad Zubaidi and Habibullah, Muzafar Shah (1995) Testing the Law of One Price on Exports of Tropical Forest Products: A Co-integration Approach. Pertanika Journal of Social Sciences & Humanities, 3 (2). pp. 163-172. ISSN 0128-7702 English |
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Trade theory often postulates the existence of a representative price, that is, a single price that prevails in all
markets. This is known as the Law of One Price (LOP). In this paper the empirical validity of LOP was tested
using the recently developed co-integration method for timber exports. Monthly data for the period January
1985 to December 1992 were used to analyse the long-run equilibrium relationship. Empirically, we found the
exchange rate pass-through on the exports to be complete for all timber products and markets. The results
obtained suggest that the data are consistent with the LOP as a long-run relationship. We conclude that the
markets for tropical forest products are generally competitive. |
format |
Article |
author |
Baharumshah, Ahmad Zubaidi Habibullah, Muzafar Shah |
spellingShingle |
Baharumshah, Ahmad Zubaidi Habibullah, Muzafar Shah Testing the Law of One Price on Exports of Tropical Forest Products: A Co-integration Approach |
author_facet |
Baharumshah, Ahmad Zubaidi Habibullah, Muzafar Shah |
author_sort |
Baharumshah, Ahmad Zubaidi |
title |
Testing the Law of One Price on Exports of Tropical Forest
Products: A Co-integration Approach |
title_short |
Testing the Law of One Price on Exports of Tropical Forest
Products: A Co-integration Approach |
title_full |
Testing the Law of One Price on Exports of Tropical Forest
Products: A Co-integration Approach |
title_fullStr |
Testing the Law of One Price on Exports of Tropical Forest
Products: A Co-integration Approach |
title_full_unstemmed |
Testing the Law of One Price on Exports of Tropical Forest
Products: A Co-integration Approach |
title_sort |
testing the law of one price on exports of tropical forest
products: a co-integration approach |
publisher |
Universiti Putra Malaysia Press |
publishDate |
1995 |
url |
http://psasir.upm.edu.my/id/eprint/3083/1/Testing_the_Law_of_One_Price_on_Exports_of_Tropical_Forest.pdf http://psasir.upm.edu.my/id/eprint/3083/ |
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