Inflation Convergence over Time: Sector-Level Evidence within Europe

Hakan Yilmazkuday

No 2201, Working Papers from Florida International University, Department of Economics

Abstract: This paper investigates inflation convergence among European countries by using sector-level data for the period between 1997:M1 and 2019:M12. Panel unit root tests at the country-sector level are conducted by using moving windows, which is useful for analyzing changes in inflation convergence and the corresponding speed of convergence over time. The results suggest that there is evidence for inflation convergence for the majority of sectors within Europe, although certain countries have experienced disruptions, especially during the 2008 financial crisis. Regarding the speed of inflation convergence, the average half-life across European countries decreased from about 15 months to about 8 months during the sample period. Important sector-level implications follow for European Union (EU) candidate countries and non-euro EU member countries in regard to the Maastricht Treaty.

Keywords: Inflation Convergence; Half-Life; Sector-Level Analysis; European Union; Euro Area (search for similar items in EconPapers)
JEL-codes: C32 E31 E58 F45 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2022-02
New Economics Papers: this item is included in nep-eec, nep-mac and nep-mon
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https://economics.fiu.edu/research/pdfs/2022_working_papers/2201.pdf First version, 2022 (application/pdf)

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Journal Article: Inflation convergence over time: Sector‐level evidence within Europe (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:2201

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