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Cross-Border Price Differentials and Goods Market Integration in East Asia

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  • Moon, Woosik

    (Asian Development Bank Institute)

Abstract

As cross-border movements of goods, capital, and labor are intensifying, it is likely that goods markets in East Asia will become increasingly integrated. This study investigates the current state of goods market integration in East Asia by measuring the extent of cross-border price differentials. Specifically, this study shows that compared with the European Union, East Asian markets are neither sufficiently integrated nor are they showing any price convergence over time.

Suggested Citation

  • Moon, Woosik, 2013. "Cross-Border Price Differentials and Goods Market Integration in East Asia," ADBI Working Papers 426, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0426
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    File URL: http://www.adbi.org/files/2013.06.27.wp426.price.differentials.market.integration.east.asia.pdf
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    References listed on IDEAS

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    1. David C. Parsley & Shang-Jin Wei, 2001. "Limiting Currency Volatility to Stimulate Goods Market Integration: A Price Based Approach," NBER Working Papers 8468, National Bureau of Economic Research, Inc.
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    3. Warren, Tony & Gary Clyde Hufbauer & Erika Wada, 2002. "Benefits of Price Convergence: Speculative Calculations, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa65.
    4. Stephen Cecchetti & Nelson C. Mark & Robert Sonora, 1998. "Price Level Convergence Among United States Cities: Lessons for the European Central Bank," Working Papers 32, Oesterreichische Nationalbank (Austrian Central Bank).
    5. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    6. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
    7. De Gregorio, Jose & Giovannini, Alberto & Wolf, Holger C., 1994. "International evidence on tradables and nontradables inflation," European Economic Review, Elsevier, vol. 38(6), pages 1225-1244, June.
    8. John H. Rogers & Gary Clyde Hufbauer & Erika Wada, 2001. "Price Level Convergence and Inflation in Europe," Working Paper Series WP01-1, Peterson Institute for International Economics.
    9. Charles Engel & John H. Rogers, 1995. "Regional Patterns in the Law of One Price: The Roles of Geography vs. Currencies," NBER Working Papers 5395, National Bureau of Economic Research, Inc.
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    11. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
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    13. Hanson, Gordon H, 1998. "North American Economic Integration and Industry Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 30-44, Summer.
    14. Capannelli, Giovanni & Lee, Jong-Wha & Petri, Peter, 2009. "Developing Indicators for Regional Economic Integration and Cooperation," Working Papers on Regional Economic Integration 33, Asian Development Bank.
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    Cited by:

    1. Neil Balchin & Lawrence Edwards & Asha Sundaram, 2015. "A Disaggregated Analysis of Product Price Integration in the Southern African Development Community," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 24(3), pages 390-415.

    More about this item

    Keywords

    market integration; east asia; cross-border price differentials; price convergence; regionalization; exchange rate fluctuation; income gap;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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