Arbeitspapier

Price Level Convergence Among United States Cities: Lessons for the European Central Bank

We study the dynamics of price indices for major U.S. cities. Using panel econometric methods, we find that relative price levels among cities mean revert, but at a surprisingly slow rate. In a panel of 15 cities from 1918 to 1995, we estimate the half life of convergence to be approximately 9 years. The following hypotheses are investigated as explanations for the slow convergence: (i) Arbitrage impediments induced by transportation costs, and (ii) and the inclusion of nontraded goods prices in the overall price index as suggested by the Balassa-Samuelson hypothesis. Our estimates provide an upper bound on convergence rates that participants in European Monetary Union may experience.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 32

Klassifikation
Wirtschaft
Thema
Purchasing power parity
Convergence
European Monetary Union

Ereignis
Geistige Schöpfung
(wer)
Cecchetti, Stephen
Mark, Nelson C.
Sonora, Robert
Ereignis
Veröffentlichung
(wer)
Oesterreichische Nationalbank (OeNB)
(wo)
Vienna
(wann)
1998

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Cecchetti, Stephen
  • Mark, Nelson C.
  • Sonora, Robert
  • Oesterreichische Nationalbank (OeNB)

Entstanden

  • 1998

Ähnliche Objekte (12)