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Regional inflation and industrial structure in monetary union

  • Nagayasu, Jun

It is often argued that an optimal currency area requires homogeneous regional inflation. However, previous empirical studies point out heterogeneity in sectoral inflation and geographical concentration of industries within a monetary union. It follows that there must be a difference in regional inflation in such a union. We examine this view using regional data from Japan which has experienced a period of rapid change in industrial structure, and show that economic structure is closely related to heterogeneous regional inflation. This study suggests that heterogeneous inflation can be a prevailing and long-lasting phenomenon in a monetary union.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37310.

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Date of creation: 01 Mar 2012
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Handle: RePEc:pra:mprapa:37310
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