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Trends in International Prices

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  • Philippe Andrade
  • Marios Zachariadis

Abstract

We exploit the panel dimension of a price levels dataset for more than one hundred product items across 140 cities in 90 countries for the period from 1990 to 2009 in order to improve our understanding of international price dispersion and the evolution of prices over time. We consider a panel data model with exchangeable units that allows for the possibility of common components for different dimensions of the panel. This allows one to gauge the contribution of each dimension of the data to total variation and to disentangle the sources of potential non-stationarity. It also allows us to identify differences in the speed of convergence for different time-varying components in response to location-specific, product-specific, and idiosyncratic shocks. Finally, we proceed to identify the economic determinants of different components to show that particular dimensions of the data are more suited for examining particular theories.

Suggested Citation

  • Philippe Andrade & Marios Zachariadis, 2010. "Trends in International Prices," University of Cyprus Working Papers in Economics 02-2010, University of Cyprus Department of Economics.
  • Handle: RePEc:ucy:cypeua:02-2010
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    File URL: http://papers.econ.ucy.ac.cy/RePEc/papers/02-10.pdf
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    References listed on IDEAS

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    13. Andrew Atkeson & Ariel Burstein, 2007. "Pricing-to-Market in a Ricardian Model of International Trade," American Economic Review, American Economic Association, vol. 97(2), pages 362-367, May.
    14. Ricardo Reis & Mark W. Watson, 2010. "Relative Goods' Prices, Pure Inflation, and the Phillips Correlation," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(3), pages 128-157, July.
    15. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters,in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Zachariadis, Marios, 2012. "Immigration and international prices," Journal of International Economics, Elsevier, pages 298-311.
    2. Zachariadis, Marios, 2011. "Immigration and international prices: An initial assessment," Economics Letters, Elsevier, vol. 110(2), pages 83-85, February.

    More about this item

    Keywords

    Price levels; Variance decomposition; Convergence; Non-stationarity; International price dispersion;

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