Testing the Effects of the Japanese Vehicle Emission-Control Law on the International Palladium Futures Market

This paper tested the effects of the 2005 vehicle emission-control law issued in Japan on the market linkages between the U.S. and Japanese palladium futures markets. To determine these effects, we applied a cointegration test both with and without break points in the time series and found that the market linkages between the two countries changed after the break in October 2005. Our results show that the long-term regulation of vehicle emissions enacted in Japan influenced the international palladium futures market