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Price convergence in the EMU? Evidence from micro data

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  • Fischer, Christoph

Abstract

The establishment of European monetary union (EMU) was widely expected to cause price convergence among member states. In an investigation of this claim, the present study avoids problems of comparability and representativeness by using an extremely detailed and comprehensive scanner database on washing machine prices and sales volumes for 17 European countries. A hedonic regression yields country-specific time series for quality-adjusted price differentials. Statistically and economically significant deviations from the LOP emerge. Log t tests firmly reject price convergence among EMU countries. Small convergence clusters can be identified but they are unrelated to EMU membership. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2009,06.

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Date of creation: 2009
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Handle: RePEc:zbw:bubdp1:7575

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Keywords: price convergence; LOP; euro introduction; log t test; hedonic price regression; scanner data;

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Cited by:
  1. Mark J. Holmes & Jesus Otero & Theodore Panagiotidis, 2012. "On the Dynamics of Gasoline Market Integration in the United States: Evidence from a Pair-wise Approach," Koç University-TUSIAD Economic Research Forum Working Papers 1230, Koc University-TUSIAD Economic Research Forum.

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