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Price convergence in the EMU? Evidence from micro data

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Author Info
Fischer, Christoph

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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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File URL: http://hdl.handle.net/10419/27660
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Publisher 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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Related research
Keywords: price convergence; LOP; euro introduction; log t test; hedonic price regression; scanner data;

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
F31 - International Economics - - International Finance - - - Foreign Exchange
F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Other Consumer Durables

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