Template-Type: ReDIF-Paper 1.0
Author-Name:  Hengyun Ma 
Author-X-Name-First: Hengyun
Author-X-Name-Last: Ma
Author-Email:  hengyun.ma@canterbury.ac.nz
Author-Workplace-Name: University of Canterbury
Author-Name:  Les Oxley
Author-X-Name-First: Les 
Author-X-Name-Last: Oxley
Author-Email: les.oxley@canterbury.ac.nz
Author-Workplace-Name: University of Canterbury
Author-Name:  John Gibson
Author-X-Name-First: John 
Author-X-Name-Last: Gibson 
Author-Email: jkgibson@waikato.ac.nz  
Author-Workplace-Name: Motu Economic and Public Policy Research and The University of Waikato
Title: Testing for Energy Market Integration in China
Abstract:  This paper investigates energy market integration in China by employing univariate, and panel-based unit root tests and Granger causality tests applied to a new energy price data set. We identify price series that converge either to absolute or relative price parity. In addition we estimate the rates (speed) at which relative prices converge to their long-run values, and the direction of causality. The results show that gasoline and diesel markets are very well integrated as a whole; and that once some geographically isolated regions are excluded, we can regard the coal market as integrated; however, the electricity market is not well integrated. The estimated intercept terms are all very small and close to zero, such that most of the relative price series can be regarded as convergent to absolute price parity. The convergence rates vary little and are relatively short when compared internationally. A rich set of causal relationships are established many showing bi-directional causality between regional centres.
Length:  29 pages
Creation-Date:  2009-03
File-URL: https://motu-www.motu.org.nz/wpapers/09_03.pdf
Number: 09_03
Classification-JEL: D24, O33, Q41
Keywords: China; Energy; Market integration; Price convergence; Time series tests
Handle: RePEc:mtu:wpaper:09_03