EconPapers    
Economics at your fingertips  
 

Real Convergence, Price Level Convergence and Inflation Differentials in Europe

Balázs Égert

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: This paper provides a comprehensive review of the factors that can cause price levels to diverge and which are at the root of different inflation rates in Europe including the EU-27. Among others, we study the structural and cyclical factors influencing market and non-market-based service, house and goods prices, and we summarise some stylised facts emerging from descriptive statistics. Subsequently, we set out the possible mismatches between price level convergence and inflation rates. Having described in detail the underlying economic factors, we proceed to demonstrate the relative importance of these factors on observed inflation rates first in an accounting framework and then by relying on panel estimations. Our estimation results provide the obituary notice for the Balassa-Samuelson effect. Nevertheless, we show that other factors related to economic convergence may push up inflation rates in transition economies. Cyclical effects and regulated prices are found to be important drivers of inflation rates in an enlarged Europe. House prices matter to some extent in the euro area, whereas the exchange rate plays a prominent (but declining) role in transition economies.

Keywords: price level; inflation; Balassa-Samuelson; tradables; house prices; regulated prices; Europe; transition (search for similar items in EconPapers)
JEL-codes: C22 E43 E50 E52 G21 O52 (search for similar items in EconPapers)
Pages: 61
Date: 2007-07-05
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (29)

Downloads: (external link)
https://www.oenb.at/dam/jcr:84b5882e-0c14-414d-ae4 ... p138_tcm16-58143.pdf (application/pdf)

Related works:
Working Paper: Real Convergence, Price Level Convergence and Inflation Differentials in Europe (2007) Downloads
Working Paper: Real Convergence, Price Level Convergence and Inflation Differentials in Europe (2007) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbwp:138

Ordering information: This working paper can be ordered from
Oesterreichische Nationalbank, Economic Studies Division, POB 61, A-1011 Vienna, Austria
markus.knell@oenb.at
The price is Free subject to availability.

Access Statistics for this paper

More papers in Working Papers from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Markus Knell (markus.knell@oenb.at).

 
Page updated 2025-01-02
Handle: RePEc:onb:oenbwp:138