Price convergence in Europe from a macro perspective: Trends and determinants (1960-2003)
AbstractThis paper studies the effects of more than 40 years of European integration on prices. Up to now, most empirical research in this area has been micro-based. We follow a macro approach. On the basis of scaled HICP strong evidence is found for price convergence in Europe, especially in the 1960s and 1990s. For the DM zone convergence is found in all decades until the German re-unification. Next to cost convergence, trade and tax harmonization, we demonstrate that exchange rate stability has been an important factor behind this process.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 012.
Date of creation: Oct 2004
Date of revision:
Economic integration; International price dispersions; Price convergence; Law of One Price; EMU; DM zone;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- F15 - International Economics - - Trade - - - Economic Integration
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
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- John H. Rogers, 2001. "Price level convergence, relative prices, and inflation in Europe," International Finance Discussion Papers 699, Board of Governors of the Federal Reserve System (U.S.).
- John H. Rogers, 2002. "Monetary union, price level convergence, and inflation: how close is Europe to the United States?," International Finance Discussion Papers 740, Board of Governors of the Federal Reserve System (U.S.).
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