IDEAS home Printed from https://ideas.repec.org/a/sae/inrsre/v33y2010i1p86-111.html
   My bibliography  Save this article

Europe Without Borders? The Effect of the Euro on Price Convergence

Author

Listed:
  • Hisham Foad

    (San Diego State University, San Diego, California, hfoad@mail.sdsu.edu)

Abstract

Has the introduction of the Euro reduced the economic significance of national borders across the Euro Area? This article extends Engel and Rogers well known work on border effects to cities across Western Europe over the period 1995—2004. Although cross-border prices across the Euro Area are still more volatile than within-country prices, the importance of the border has diminished since the euro was introduced in 1999. The impact of the common currency on the border effect varies by country size, with the largest decreases occurring between larger Euro countries. Although cross-border price volatility has not changed between the United Kingdom and large Euro countries, volatility has actually increased between the small Euro countries and the United Kingdom. These results are consistent with the fact that exchange rates are more likely to adjust to price differentials between small countries than between large countries.

Suggested Citation

  • Hisham Foad, 2010. "Europe Without Borders? The Effect of the Euro on Price Convergence," International Regional Science Review, , vol. 33(1), pages 86-111, January.
  • Handle: RePEc:sae:inrsre:v:33:y:2010:i:1:p:86-111
    as

    Download full text from publisher

    File URL: http://irx.sagepub.com/content/33/1/86.abstract
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Méjean, Isabelle & Schwellnus, Cyrille, 2009. "Price convergence in the European Union: Within firms or composition of firms?," Journal of International Economics, Elsevier, vol. 78(1), pages 1-10, June.
    2. Mohsin, Hasan M & Gilbert, Scott, 2010. "Relative City Price Convergence in Pakistan: Empirical Evidence from Spatial GLS," MPRA Paper 27901, University Library of Munich, Germany.
    3. Leon Podkaminer, 2013. "Persistent gaps between purchasing power parities and exchange rates under the law of one price: a puzzle (partly) explained?," Bank i Kredyt, Narodowy Bank Polski, vol. 44(4), pages 333-352.
    4. Jan-Egbert Sturm & Ulrich Fritsche & Michael Graff & Michael Lamla & Sarah Lein & Volker Nitsch & David Liechti & Daniel Triet, 2009. "The euro and prices: changeover-related inflation and price convergence in the euro area," European Economy - Economic Papers 2008 - 2015 381, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Hasan Muhammad Mohsin & Scott Gilbert, 2010. "The Relative City Price Convergence in Pakistan: Empirical Evidence from Spatial GLS," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 439-448.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:inrsre:v:33:y:2010:i:1:p:86-111. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.