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Regional price levels in Germany

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  • Michael Roos

Abstract

Cross-sectional evidence on price levels is scarce for all countries. However, several studies suggest that there might exist considerable differences in price levels within countries, which has obvious welfare implications. A sample of price levels in 50 German cities in 1993 is used to analyse the determinants of inter-city price level differentials. The most important explanatory variables for price level differentials are population size and density and the average wage level. Using this information, the price levels are predicted in all 440 German districts and aggregated to the state level. At the state level convergence of the price levels to a common mean is found, but at a very low speed. The estimated half-life is about 19 years.

Suggested Citation

  • Michael Roos, 2006. "Regional price levels in Germany," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1553-1566.
  • Handle: RePEc:taf:applec:v:38:y:2006:i:13:p:1553-1566 DOI: 10.1080/00036840500407207
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    Cited by:

    1. Deckers Thomas & Falk Armin & Schildberg-Hörisch Hannah, 2016. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1337-1358, September.
    2. Joachim Ragnitz, 2009. "Wirtschaftspolitische Aufgaben in Ostdeutschland," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(05), pages 21-29, October.
    3. Caliendo, Marco & Künn, Steffen & Mahlstedt, Robert, 2017. "The return to labor market mobility: An evaluation of relocation assistance for the unemployed," Journal of Public Economics, Elsevier, vol. 148(C), pages 136-151.
    4. Shon M. Ferguson, 2015. "Endogenous Product Differentiation, Market Size and Prices," Review of International Economics, Wiley Blackwell, vol. 23(1), pages 45-61, February.
    5. repec:spr:anresc:v:58:y:2017:i:3:d:10.1007_s00168-017-0813-x is not listed on IDEAS
    6. Sidorov, Alexander, 2011. "The Impact of Exogenous Asymmetry on Trade and Agglomeration in Core-Periphery Model," MPRA Paper 29627, University Library of Munich, Germany.
    7. Elissaios Papyrakis & Ohad Raveh, 2013. "An Empirical Analysis of a Regional Dutch Disease: The case of Canada," OxCarre Working Papers 106, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    8. Reinhold Kosfeld & Hans-Friedrich Eckey & Matthias Türck, 2008. "New economic geography and regional price level," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 28(1), pages 43-60, February.
    9. 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.
    10. repec:ces:ifodre:v:16:y:2009:i:05:p:s.21-29 is not listed on IDEAS
    11. Simón Sosvilla-Rivero & Salvador Gil-Pareja, 2012. "Convergence in car prices among European countries," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3247-3254, September.
    12. Matěj Bajgar & Petr Janský, 2015. "Skutečná kupní síla v krajích České republiky: zohlednění regionální cenové hladiny a struktury pracovní síly
      [Purchasing Power in the Regions: Reflecting Price Levels and Employment Structures]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(7), pages 860-876.
    13. Akgündüz, Yusuf Emre & van den Berg, Marcel & Hassink, Wolter, 2015. "The Impact of Refugee Crises on Host Labor Markets: The Case of the Syrian Refugee Crisis in Turkey," IZA Discussion Papers 8841, Institute for the Study of Labor (IZA).
    14. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2010. "Internal migration, regional labour market dynamics and implications for German East-West disparities: results from a Panel VAR," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 30(2), pages 159-189, September.
    15. Michael Roos, 2006. "Earnings Disparities in Unified Germany: Nominal versus Real," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 26(2), pages 171-189, October.
    16. Michael Gühne & Gunther Markwardt, 2014. "Lohnunterschiede zwischen Ost- und Westdeutschland: Neue Einsichten," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 21(03), pages 37-44, June.
    17. Linz Stefan, 2010. "Regional Consumer Price Differences Within Germany: Information Demand, Data Supply and the Role of the Consumer Price Index," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(6), pages 814-831, December.
    18. Boes, Stefan & Lipp, Markus & Winkelmann, Rainer, 2007. "Money illusion under test," Economics Letters, Elsevier, vol. 94(3), pages 332-337, March.
    19. Blien, Uwe & Gartner, Hermann & Stüber, Heiko & Wolf, Katja, 2007. "Expensive and low-price places to live : regional price levels and the agglomeration wage differential in Western Germany," IAB Discussion Paper 200715, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Ohad Raveh, 2013. "Dutch Disease, Factor Mobility, and the Alberta Effect - The case of federations," OxCarre Working Papers 100, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    21. Joachim Ragnitz, 2009. "Ostdeutschland heute: Viel erreicht, viel zu tun," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(18), pages 03-13, September.
    22. Peter von der Lippe & Claus Breuer, 2009. "Regionale Kaufkraftvergleiche in Deutschland: Bedarf, Methoden und Machbarkeit," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 3(1), pages 25-40, June.
    23. Uwe Blien & Hermann Gartner & Heiko Stüber & Katja Wolf, 2009. "Regional price levels and the agglomeration wage differential in western Germany," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 71-88, March.
    24. Elissaios Papyrakis & Ohad Raveh, 2014. "An Empirical Analysis of a Regional Dutch Disease: The Case of Canada," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(2), pages 179-198, June.
    25. Timo MITZE & Björn ALECKE & Gerhard UNTIEDT, "undated". "Determinants of Interregional Migration Among German States and its Implications for Reducing East-West Disparities: Results from a Panel VAR Using Efficient GMM Estimation," EcoMod2008 23800089, EcoMod.

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