Price-Level Convergence in the Eurozone
comunitat-uji-handle:10234/25884
comunitat-uji-handle2:10234/25938
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http://eprints.sim.ucm.es/30038/ |
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Price-Level Convergence in the EurozoneFecha de Publicación
2016-04-12Resumen
This paper shows that price level trends in many of the EMU countries evolve with different patterns and that these patterns will not converge in the long-run. We propose that the hypothesis of price convergence should ... [+]
This paper shows that price level trends in many of the EMU countries evolve with different patterns and that these patterns will not converge in the long-run. We propose that the hypothesis of price convergence should be evaluated and tested employing the relative prices. To this aim, we: (i) define the asymptotic price level convergence in mean and variance, (ii) provide a model for relative price levels that includes a transition path, and (iii) show how to properly test the definitions stated. Our results show that only French and German price levels converge in mean to a zero gap in the EMU while some others, not many, converge to a nonzero significant gap. This should be a matter of concern for the European monetary policy makers as it implies that the monetary policy does not affect all the EMU members equally. [-]
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info:eu-repo/semantics/workingPaperDerechos de acceso
info:eu-repo/semantics/openAccess