Extrinsic versus intrinsic models for FETs

This paper investigates whether there exists a long-run equilibrium between wheat prices in different markets and whether there has been a trend towards wheat market integration world wide. American, Canadian, Australian and French monthly wheat prices from January 1987 to December 1996 are applied to track policy effects of international trade agreements. First, a subsample covering the period 1987-94 is analysed, and then a subsample made up of the last two years is analysed. Johansen-Juselius estimation is undertaken to detect the devel opment throughout the period. The results do not indicate increased integration the last years. However, the period following the reform is rather short, m aking the results fragile.