Regional inflation dynamics using space-time models

Helena Marques, Gabriel Pino and Juan de Dios Tena

No 40, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada

Abstract: This paper 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 that difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions.

Keywords: regional inflation dynamics; space-time models; Chile (search for similar items in EconPapers)
JEL-codes: C21 C23 E31 E52 E58 R11 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-geo, nep-mac, nep-mon and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Regional inflation dynamics using space–time models (2014)
Working Paper: Regional inflation dynamics using space-time models (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ubi:deawps:40

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