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Regional price levels in Germany

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  • Michael W.M. Roos

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Abstract

Cross-sectional evidence on price levels is scarce in all countries. However, several studies suggest that considerable differences in price levels within countries exist, which has obvious welfare implications. I use a sample of price levels in 50 German cities in 1993 to analyze the determinants of inter-city price level differentials. The most important factors driving price level differentials are population size and the average wage level. Using this information, I predict the price levels in all 440 German districts and aggregate them to the state level. On the state level I find convergence of the price levels to a common mean, but at a very low speed. The estimated half-life is about 15 years.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa03p511.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwrsa:ersa03p511

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  1. Takatoshi Tabuchi, 2001. "On Interregional Price Differentials," The Japanese Economic Review, Japanese Economic Association, vol. 52(1), pages 104-115.
  2. Jeffrey A. Frankel and Andrew K. Rose., 1995. "A Panel Project on Purchasing Power Parity: Mean Reversion Within and Between Countries," Center for International and Development Economics Research (CIDER) Working Papers C95-052, University of California at Berkeley.
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  8. Hanson, G.H., 1999. "`Market Potential, Increasing Returns, and Geographic Concentration," Working Papers 439, Research Seminar in International Economics, University of Michigan.
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Cited by:
  1. Ferguson, Shon, 2011. "Endogenous Product Differentiation, Market Size and Prices," Working Paper Series 878, Research Institute of Industrial Economics.
  2. Michael Gühne & Gunther Markwardt, 2014. "Lohnunterschiede zwischen Ost- und Westdeutschland: Neue Einsichten," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 21(03), pages 37-44, 06.
  3. Joachim Ragnitz, 2009. "Wirtschaftspolitische Aufgaben in Ostdeutschland," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, vol. 16(05), pages 21-29, October.
  4. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR," Jahrbuch für Regionalwissenschaft, Springer, vol. 30(2), pages 159-189, September.
  5. Stefan Linz, 2010. "Regional Consumer Price Differences Within Germany Information Demand, Data Supply and the Role of the Consumer Price Index," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(6), pages 814-831, December.
  6. Deckers, Thomas & Falk, Armin & Schildberg-Hörisch, Hannah, 2013. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 450, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Boes, Stefan & Lipp, Markus & Winkelmann, Rainer, 2007. "Money illusion under test," Economics Letters, Elsevier, vol. 94(3), pages 332-337, March.
  8. Joachim Ragnitz, 2009. "Ostdeutschland heute: Viel erreicht, viel zu tun," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 62(18), pages 03-13, 09.
  9. Peter von der Lippe & Claus Breuer, 2009. "Regionale Kaufkraftvergleiche in Deutschland: Bedarf, Methoden und Machbarkeit," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 3(1), pages 25-40, June.
  10. Dominik Weiß, 2008. "Mietpreise und Lebensqualität: Ist das Wohnen in Ostdeutschland wirklich günstig?," IWH Discussion Papers 12, Halle Institute for Economic Research.
  11. Blien, Uwe & Gartner, Hermann & Stüber, Heiko & Wolf, Katja, 2007. "Expensive and low-price places to live : regional price levels and the agglomeration wage differential in Western Germany," IAB Discussion Paper 200715, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  12. Elissaios Papyrakis & Ohad Raveh, 2014. "An Empirical Analysis of a Regional Dutch Disease: The Case of Canada," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 58(2), pages 179-198, June.
  13. Ohad Raveh, 2013. "Dutch Disease, Factor Mobility, and the Alberta Effect - The case of federations," OxCarre Working Papers 100, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  14. Uwe Blien & Hermann Gartner & Heiko Stüber & Katja Wolf, 2009. "Regional price levels and the agglomeration wage differential in western Germany," The Annals of Regional Science, Springer, vol. 43(1), pages 71-88, March.
  15. Reinhold Kosfeld & Hans-Friedrich Eckey, 2010. "Market access, regional price level and wage disparities: the German case," Jahrbuch für Regionalwissenschaft, Springer, vol. 30(2), pages 105-128, September.
  16. Elissaios Papyrakis & Ohad Raveh, 2013. "An Empirical Analysis of a Regional Dutch Disease: The case of Canada," OxCarre Working Papers 106, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  17. Reinhold Kosfeld & Hans-Friedrich Eckey, 2008. "Market Access, Regional Price Level and Wage Disparities: The German Case," MAGKS Papers on Economics 200814, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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