Doctoral student at the University of Navarre, Héctor Cárcel, delivered a seminar with NCID on the use of econometric techniques that study time series data and its applicability in analyzing macroeconomic variables in countries that belong to economic unions, as well as monetary or commercial unions.

“Our analysis is like the first x-ray after breaking a bone, that allows us to see when problems and success can possibly occur in country unions. With this first level of analysis political agents and economic leaders of said organizations can have a sound basis to form their proposals”, he explained during the session.

A time series is a sequence of data or observations measured and organized chronologically, which allow us to carry out predictions and analyses about the nature of the variables we are studying.

Following a brief introduction of this methodology, Cárcel presented three articles in which he and his supervisor, Luis Alberiko Gil-Alaña, analyze time series belonging to three economic unions: East African Community (EAC), the Central American Monetary Council (CMCA) and the Association of Southeast Asian Nations (ASEAN).

To start he presented the article Currency Union in the East African Community (EAC): A Fractional and Cointegration Approach, a project that was carried out with the collaboration of NCID doctoral student, Godfrey Madigu. This article examined inflation rates in the five countries of the EAC, Burundi, Kenya, Rwanda, Tanzania, and Uganda.

Next he turned to an article on the Central American Monetary Council, a union of central banks that was founded in 1964 where the following countries have representation: Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and the Dominican Republic. The article, Inflation Analysis in the Central American Monetary Council, concludes that there is not strong evidence of cointegrated relations between those countries, and that there is sufficient evidence to conclude that a shock in any given country would not spread to the greater union. This can be considered a positive result, as the CMCA’s central purpose is maintaining financial and economic stability in the region.

The final study he presented was on the ASEAN case, a political and economic organization constituted by ten countries in the region. “This association strongly resembles the European Union in its early days, as member countries come looking for economic growth and to cement peace with their neighbors”, explained Cárcel, adding as well that “the results of our analysis lead us to believe that there are strong reasons to make an economic union in the region, as the member countries have began thinking about at the end of 2015.”