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Inter-Regional Price Convergence and Market Integration in Russia

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Author Info

  • Konstantin Gluschenko

    (Institute of Economics & Industrial Engineering, Siberian Branch of the Russian Academy of Sciences)

Abstract

The paper analyzes a spatial pattern of goods market integration in Russia. By the spatial pattern is meant a state of each individual region of the country: whether it is integrated, and if not, whether it moves towards integration. Time series of the cost of the basket of 25 basic foods across 75 regions of Russia for 1994-2000 with monthly frequency are used as the empirical stuff. With the use of nonlinear cointegration relationship that includes asymptotically subsiding trend capturing movement towards integration, 36% of Russian regions are found to be integrated with the national market; 44% of them are non- integrated, but are tending to integration with the national market; and 20% of regions are non-integrated and having no such a trend. It is found that s-convergence of regional prices takes place, implying that, despite the presence of regions not tending to integration, the predominant trend is the improvement in market integration.

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File URL: http://128.118.178.162/eps/urb/papers/0504/0504002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Urban/Regional with number 0504002.

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Length: 26 pages
Date of creation: 08 Apr 2005
Date of revision:
Handle: RePEc:wpa:wuwpur:0504002

Note: Type of Document - pdf; pages: 26
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Web page: http://128.118.178.162

Related research

Keywords: market integration; law of one price; price dispersion; convergence; Russian regions;

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  1. Konstantin Gluschenko, 2004. "The Evolution of Cross-Region Price Distribution in Russia," William Davidson Institute Working Papers Series 2004-716, William Davidson Institute at the University of Michigan.
  2. Glushchenko Konstantin, 2002. "Common Russian Market: Myth rather than Reality," EERC Working Paper Series 01-11e, EERC Research Network, Russia and CIS.
  3. David C. Parsley & Shang-Jin Wei, 1996. "Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations," NBER Working Papers 5654, National Bureau of Economic Research, Inc.
  4. 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.
  5. Perron, P., 1989. "Testing For A Unit Root In A Time Series With A Changing Mean," Papers 347, Princeton, Department of Economics - Econometric Research Program.
  6. Durlauf,S.N. & Quah,D.T., 1998. "The new empirics of economic growth," Working papers 3, Wisconsin Madison - Social Systems.
  7. Berkowitz, Daniel & DeJong, David N., 1999. "Russia's internal border," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 633-649, September.
  8. Newey, Whitney K & West, Kenneth D, 1994. "Automatic Lag Selection in Covariance Matrix Estimation," Review of Economic Studies, Wiley Blackwell, vol. 61(4), pages 631-53, October.
  9. Bernard, Andrew B & Durlauf, Steven N, 1995. "Convergence in International Output," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 97-108, April-Jun.
  10. Berkowitz, Daniel & DeJong, David N., 2003. "Regional integration: an empirical assessment of Russia," Journal of Urban Economics, Elsevier, vol. 53(3), pages 541-559, May.
  11. Charles Engel & John H. Rogers, 1995. "How wide is the border?," Research Working Paper 95-09, Federal Reserve Bank of Kansas City.
  12. Gerald Carlino & Leonard Mills, 1993. "Testing neoclassical convergence in regional incomes and earnings," Working Papers 93-22, Federal Reserve Bank of Philadelphia.
  13. Glushchenko Konstantin, 2004. "Integration of the Russian Market. Empirical Analysis," EERC Working Paper Series 04-06e, EERC Research Network, Russia and CIS.
  14. MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-18, Nov.-Dec..
  15. Cushman, David O. & MacDonald, Ronald & Samborsky, Mark, 2001. "The law of one price for transitional Ukraine," Economics Letters, Elsevier, vol. 73(2), pages 251-256, November.
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