Regional inflation dynamics using space–time models

Helena Marques, Gabriel Pino and Juan Dios Tena Horrillo ()

Empirical Economics, 2014, vol. 47, issue 3, 1147-1172

Abstract: This article provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation, while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe, and the reasons for this difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions. Our results are robust to different specifications, regression methods and product groupings. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Regional inflation dynamics; Space–time models; Common factors; Chile; E31; E52; E58; R11; C23; C21 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00181-013-0763-9 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Regional inflation dynamics using space-time models (2009)
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:spr:empeco:v:47:y:2014:i:3:p:1147-1172

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-013-0763-9

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().