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Complete or Partial Inflation Convergence in the EU?

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Author Info
Consuelo Gámez Amián () (Universidad de Málaga)
Amalia Morales Zumaquero. () (University of Málaga and CentrA.)
Abstract

This paper has one primary aim: to analyze whether there exists evidence in favor of inflation convergence, complete convergence, or common trends, partial convergence, within the European Union (EU). The analysis is done in a bivariate and multivariate framework, for traded and non-traded inflation rates, using sequential unit root tests, common trends analysis, and cointegration tests that allow for structural breaks. The results suggest that there is a di¤erent behavior between traded and non-traded inflation rates. In the bivariate framework, there is much stronger evidence of complete convergence for traded inflation rates than for non-traded inflation rates. In the multivariate framework, the complete convergence is only presented in the most tradeable inflation rate and there is a small number of common trends for the rest of traded inflation rates that suggests evidence of partial convergence in terms of long-run relationships. Finally, neither complete nor partial convergence is presented in the non-traded inflation rates.

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Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2002/09.

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Length: 13 pages
Date of creation: 2002
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Handle: RePEc:cea:doctra:e2002_09

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Related research
Keywords: convergence common trends structural breaks traded and nontraded inflation rates European Union.

Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
F15 - International Economics - - Trade - - - Economic Integration

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References listed on IDEAS
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  5. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November. [Downloadable!] (restricted)
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  7. Gonzalo, J. & Granger, C., 1992. "Estimation of Common Long-Memory Components in Cointegrated Systems," Papers 4, Boston University - Department of Economics.
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  8. Perron, Pierre & Vogelsang, Timothy J, 1992. "Nonstationarity and Level Shifts with an Application to Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 301-20, July.
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  9. Miriam Camarero & Vicente Esteve & Cecilio Tamarit, 2000. "Price convergence of peripheral European countries on the way to the EMU: A time series approach," Empirical Economics, Springer, vol. 25(1), pages 149-168. [Downloadable!] (restricted)
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  10. Bernard, Andrew B & Durlauf, Steven N, 1995. "Convergence in International Output," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun. [Downloadable!] (restricted)
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  11. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254. [Downloadable!] (restricted)
  12. Hafer, R W & Kutan, A M, 1994. "A Long-Run View of German Dominance and the Degree of Policy Convergence in the EMS," Economic Inquiry, Oxford University Press, vol. 32(4), pages 684-95, October.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Salvador Gil-Pareja & Simón Sosvilla-Rivero, . "Price Convergence in the European Car Market," Working Papers 2005-22, FEDEA. [Downloadable!]
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