On price convergence in Eurozone
AbstractWe investigate price level convergence with Germany in eleven countries belonging to the Eurozone between January 1970 and July 2011. Relying on smooth transition regression models, we show that the price convergence process is nonlinear, depending on the size of the price differential: for most countries, price convergence occurs only when price differentials with Germany exceed a certain threshold. Moreover, our findings put forward some heterogeneity across the Eurozone members in terms of price convergence speed, that can be explained by the evolution of price-competitiveness, rigidities in labor markets, but also by specialization patterns.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2011-34.
Length: 19 pages
Date of creation: 2011
Date of revision:
price convergence; Eurozone; smooth transition regression models; half-life;
Other versions of this item:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F15 - International Economics - - Trade - - - Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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- Mario J. Crucini & Chris I. Telmer & Marios Zachariadis, 2001.
"Understanding European Real Exchange Rates,"
Vanderbilt University Department of Economics Working Papers
0120, Vanderbilt University Department of Economics.
- Marina Glushenkova & Marios Zachariadis, 2014. "Understanding Law-of-One-Price Deviations across Europe Before and After the Euro," University of Cyprus Working Papers in Economics 01-2014, University of Cyprus Department of Economics.
- David Guerreiro, 2013. "Is the European debt crisis a mere balance of payments crisis?," FIW Working Paper series 118, FIW.
- Wikipedia:Reference desk/Archives/Humanities/2012 July 27 in Wikipedia (English)
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