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Have Absolute Price Levels Converged for Developed Economies? The Evidence since 1870

Author

Listed:
  • Lein-Lein Chen

    (Department of Economics, University of Nevada)

  • Seungmook Choi

    (Department of Finance, University of Nevada)

  • John Devereux

    (Department of Economics, Queens College, CUNY)

Abstract

We compare price level and income convergence since 1870 for eleven developed economies using implicit price deflators derived from the GDP data of Maddison (1995, 2001, 2003). We find that "sigma" and "beta" convergence for prices occurs later and to a lesser extent than income. Price levels converge after 1950 while income convergence begins in the 1880s. We find no evidence for stochastic price convergence or for "club" price convergence. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Lein-Lein Chen & Seungmook Choi & John Devereux, 2008. "Have Absolute Price Levels Converged for Developed Economies? The Evidence since 1870," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 29-36, February.
    • Handle: RePEc:tpr:restat:v:90:y:2008:i:1:p:29-36
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    Cited by:

    1. Marina Glushenkova & Andros Kourtellos & Marios Zachariadis, 2018. "Barriers to price convergence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(7), pages 1081-1097, November.
    2. Klasing, Mariko J. & Milionis, Petros, 2014. "Quantifying the evolution of world trade, 1870–1949," Journal of International Economics, Elsevier, vol. 92(1), pages 185-197.
    3. Lawrence Edwards & Neil Rankin, 2016. "Is Africa integrating? Evidence from product markets," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(2), pages 266-289, March.
    4. Ritola, Maria, 2008. "Price convergence and geographic dimension of market integration: Evidence from China," BOFIT Discussion Papers 13/2008, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. International Monetary Fund, 2010. "Albania: Selected Issues," IMF Staff Country Reports 2010/206, International Monetary Fund.
    6. repec:zbw:bofitp:2008_013 is not listed on IDEAS
    7. Ritola, Maria, 2008. "Price convergence and geographic dimension of market integration : Evidence from China," BOFIT Discussion Papers 13/2008, Bank of Finland, Institute for Economies in Transition.
    8. 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.

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