Regional inflation dynamics using space-time models
AbstractThis paper provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe and the reasons for that difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions.
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Bibliographic InfoPaper provided by Universitat de les Illes Balears, Departament d'Economía Aplicada in its series DEA Working Papers with number 40.
Date of creation: 2009
Date of revision:
regional inflation dynamics; space-time models; Chile;
Other versions of this item:
- H. Marques & G. Pino & JD. Tena, 2009. "Regional inflation dynamics using space-time models," Working Paper CRENoS 200915, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-10 (All new papers)
- NEP-GEO-2010-01-10 (Economic Geography)
- NEP-MAC-2010-01-10 (Macroeconomics)
- NEP-MON-2010-01-10 (Monetary Economics)
- NEP-URE-2010-01-10 (Urban & Real Estate Economics)
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