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Relative City Price Convergence in Pakistan: Empirical Evidence from Spatial GLS

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  • Mohsin, Hasan M
  • Gilbert, Scott

Abstract

The study estimates relative city price convergence using CPI data from July 2001 to June 2008 on 35 Pakistani cities. Two cities Lahore and Karachi are chosen to be the numeraire cities. The half life of relative city price shock has also been estimated. The study finds average half life of price shock to be less than 5 months but it varies from 1.3 to 68 months in the case of individual cities. The estimates of Spatial GLS are found to be lower than OLS which may imply that Spatial Correlations are important factor for the estimation of half life. Furthermore, the average half life of a price shock in Lahore is less than that of Karachi.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:27901
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    References listed on IDEAS

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    9. 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.
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    Cited by:

    1. Saghir Pervaiz Ghauri & Rizwan Raheem Ahmed & Jolita Vveinhardt & Dalia Streimikiene, 2017. "Estimation of Relationship between Inflation and Relative Price Variability: Granger Causality and ARDL Modelling Approach," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(44), pages 249-249, February.
    2. Matthew McCartney, 2018. "The China-Pakistan Economic Corridor (CPEC): Considering Contemporary Pakistan through Old-Fashioned Economics and Historical Case Studies," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 23(2), pages 19-48, July-Dec.

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    More about this item

    Keywords

    Prices; convergence; Spatial GLS;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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