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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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Citations

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Cited by:
  1. Mario J. Crucini & Christopher I. Telmer, 2012. "Microeconomic Sources of Real Exchange Rate Variability," NBER Working Papers 17978, National Bureau of Economic Research, Inc.
  2. 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," Discussion Paper Series 2012_10, Department of Economics, University of Macedonia, revised Oct 2012.
  3. Sophie-Charlotte Meyer & Ronald Schettkat, 2013. "Price Convergence in Euroland. Evidence from micro data without noise," Schumpeter Discussion Papers, Universitätsbibliothek Wuppertal, University Library sdp13005, Universitätsbibliothek Wuppertal, University Library.
  4. Parteka, Aleksandra & Wolszczak-Derlacz, Joanna, 2013. "Integrated Sectors - Diversified Earnings: The (Missing) Impact of Offshoring on Wages and Wage Convergence in the EU27," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt3tm2935j, Institute of Industrial Relations, UC Berkeley.
  5. Marina Glushenkova & Marios Zachariadis, 2014. "Understanding Law-of-One-Price Deviations across Europe Before and After the Euro," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 01-2014, University of Cyprus Department of Economics.
  6. Michael Morrison & Matías Fontenla, 2013. "Price convergence in an online virtual world," Empirical Economics, Springer, Springer, vol. 44(3), pages 1053-1064, June.
  7. Eyal Dvir & Georg H. Strasser, 2013. "Does Marketing Widen Borders? Cross-Country Price Dispersion in the European Car Market," Boston College Working Papers in Economics, Boston College Department of Economics 831, Boston College Department of Economics, revised 04 Apr 2014.
  8. Borsi, Mihály Tamás & Metiu, Norbert, 2013. "The evolution of economic convergence in the European Union," Discussion Papers 28/2013, Deutsche Bundesbank, Research Centre.

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