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Description：
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Abstract: This paper analyzes currency union integration by testing whether price levels in member countries possess a common stochastic trend. The trace statistic test for cointegration proposed by Johansen (1995) demonstrates the presence of such a trend for most unions. A disaggregated analysis identifies a common stochastic trend for several though fewer than half of country pairs within a union, particularly compared to the set of country pairs not in unions. Some unions such as the Eurozone have small shares of cointegrated country pairs. These results provide an alternative metric to intra-union trade for gauging the extent of currency union integration.
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