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Disparities in Prices and Income across German NUTS 3 Regions

Author

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  • Reinhold Kosfeld
  • Hans-Friedrich Eckey
  • Jorgen Lauridsen

Abstract

In EU countries, knowledge on spatial disparities in overall price level is extremely scarce. When interregional price disparities are large, however, nominal income measures fail to assess prosperity and the catch-up processes of regions. Despite its importance for regional policy, no official regional price statistic is available as a standard. On account of this gap, this paper deals with the econometric estimation of regional price indices for German NUTS 3 regions. Econometric price models for the consumer price index (CPI) and the housing rent index (HRI) are developed on the ground of utility maximization in a two-goods model. The estimated price indices are used to analyse price disparities in the period 1995 – 2004 across German NUTS 3 regions. Real income comparisons show that the East /West gap is likely to be substantially larger than assessed from incomplete price data in previous studies.

Suggested Citation

  • Reinhold Kosfeld & Hans-Friedrich Eckey & Jorgen Lauridsen, 2008. "Disparities in Prices and Income across German NUTS 3 Regions," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 54(2), pages 123-141.
    • Handle: RePEc:aeq:aeqaeq:v54_y2008_i2_q2_p123-141
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    Cited by:

    1. Bruckmeier, Kerstin & Schwengler, Barbara, 2009. "The impact of federal social policies on spatial income inequalities in Germany : empirical evidence from social security data," IAB-Discussion Paper 200901, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Jan Cadil & Petr Mazouch & Petr Musil & Jana Kramulova, 2014. "True regional purchasing power: evidence from the Czech Republic," Post-Communist Economies, Taylor & Francis Journals, vol. 26(2), pages 241-256, June.
    3. Reinhold Kosfeld & Hans-Friedrich Eckey, 2010. "Market access, regional price level and wage disparities: the German case," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 30(2), pages 105-128, September.
    4. Ulrich Zierahn, 2012. "The importance of spatial autocorrelation for regional employment growth in Germany," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 32(1), pages 19-43, March.
    5. Nora Würz & Timo Schmid & Nikos Tzavidis, 2022. "Estimating regional income indicators under transformations and access to limited population auxiliary information," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 185(4), pages 1679-1706, October.
    6. Rupert Kawka, 2010. "Regionale Preisunterschiede in den alten und neuen Ländern," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(02), pages 5-16, 04.
    7. Nisén, Jessica & Klüsener, Sebastian & Dahlberg, Johan & Dommermuth, Lars & Jasilioniene, Aiva & Kreyenfeld, Michaela & Lappegård, Trude & Li, Peng & Martikainen, Pekka & Neels, Karel & Riederer, Bern, 2020. "Educational differences in cohort fertility across sub-national regions in Europe," LSE Research Online Documents on Economics 106201, London School of Economics and Political Science, LSE Library.
    8. Dreger Christian & Kosfeld Reinhold, 2010. "Do Regional Price Levels Converge?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(3), pages 274-286, June.
    9. Jessica Nisén & Sebastian Klüsener & Johan Dahlberg & Lars Dommermuth & Aiva Jasilioniene & Michaela Kreyenfeld & Trude Lappegård & Peng Li & Pekka Martikainen & Karel Neels & Bernhard Riederer & Sask, 2021. "Educational Differences in Cohort Fertility Across Sub-national Regions in Europe," European Journal of Population, Springer;European Association for Population Studies, vol. 37(1), pages 263-295, March.
    10. Rupert Kawka, 2010. "Regionale Preisunterschiede in den alten und neuen Ländern," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(02), pages .5-16, April.
    11. Rokicki, Bartlomiej & Blien, Uwe & Hewings, Geoffrey J.D. & thi Hong Van, Phan, 2021. "Is there a wage curve with regional real wages? An analysis for the US and Poland," Economic Modelling, Elsevier, vol. 102(C).
    12. Christian Dreger & Reinhold Kosfeld, 2007. "Do Regional Price Levels Converge?: Paneleconometric Evidence Based on German Districts," Discussion Papers of DIW Berlin 754, DIW Berlin, German Institute for Economic Research.
    13. Weiß, Dominik, 2008. "Mietpreise und Lebensqualität: Ist das Wohnen in Ostdeutschland wirklich günstig?," IWH Discussion Papers 12/2008, Halle Institute for Economic Research (IWH).
    14. Hans-Friedrich Eckey & Reinhold Kosfeld & Alexander Werner, 2008. "Die Lohnkurve in Deutschland unter Berücksichtigung des regionalen Preisniveaus," MAGKS Papers on Economics 200810, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    15. Jessica Nisén & Sebastian Klüsener & Johan Dahlberg & Lars Dommermuth & Aiva Jasilioniene & Michaela Kreyenfeld & Trude Lappegård & Peng Li & Pekka Martikainen & Karel Neels & Bernhard Riederer & Sask, 2019. "Educational differences in cohort fertility across sub-national regions in Europe," MPIDR Working Papers WP-2019-018, Max Planck Institute for Demographic Research, Rostock, Germany.

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    More about this item

    Keywords

    Regional price level; econometric price models; price disparities; real income disparities;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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