Interdependence of the prices of pork in the domestic and foreign markets

Abstract

This paper aims to analyze the interdependence of the prices of pork in the domestic and foreign markets from July 1994 to September 2008. For this, we used the Test of Co-integration of Johansen and employed the model of Vector Error Correction (VEC). According to the results, the price series of international and Brazilian beef are co-integrated. Changes in international prices are transmitted to domestic prices in the long-term imbalances between the series are corrected. The analysis of decomposition of the forecast error, there was greater focus on the dynamics of foreign price series on the series of internal prices. It was also that these price series more responsive to price shocks themselves.