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The Law of one Price in the Russian Economy

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  • Konstantin Gluschenko

Abstract

Taking the law of one price as a test for market integration, the spatial set-up of Russia's market integration over 1994-2000 is analyzed with the use of time series of the cost of a staples basket across Russian regions. The law is found to hold for about 50% to 60% of Russian regions, estimates of a threshold model suggesting rather high barriers to inter-regional trade. To reveal whether there is a movement towards market integration among non-integrated regions, dynamics of cross-sectional distribution of prices receives study. The results indicate that such a tendency does take place. An effort is made to identify forces responsible for Enter-regional price disparities.

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File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp152.pdf
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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 15204.

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Length: 40 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:lic:licosd:15204

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Keywords: market integration; price dispersion; price convergence; Russia; Russian regions;

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References

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  1. Daniel Berkowitz & David N. DeJong, 2001. "The evolution of market integration in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(1), pages 87-104, March.
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  9. Sarno, Lucio & Taylor, Mark P, 2001. "Purchasing Power Parity and the Real Exchange Rate," CEPR Discussion Papers 2913, C.E.P.R. Discussion Papers.
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  16. Glushchenko Konstantin, 2001. "Inter-regional Variability of Inflation Rates," EERC Working Paper Series 99-17e, EERC Research Network, Russia and CIS.
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  24. Gluschenko, Konstantin, 2010. "The Law of One Price in the Russian Economic Space," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 17(1), pages 3-19.
  25. Danny Quah, 1992. "Empirical cross-section dynamics in economic growth," Discussion Paper / Institute for Empirical Macroeconomics 75, Federal Reserve Bank of Minneapolis.
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  27. Gluschenko, Konstantin, 2011. "Price convergence and market integration in Russia," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 160-172, March.
  28. Paula De Masi & Vincent Koen, 1997. "Prices in Transition," IMF Working Papers 97/158, International Monetary Fund.
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Cited by:
  1. Gluschenko, Konstantin, 2010. "The Law of One Price in the Russian Economic Space," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 17(1), pages 3-19.

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