Why price†level dispersion went up in Europe after the financial crisis

Marco Hoeberichts () and Ad Stokman

The World Economy, 2018, vol. 41, issue 3, 913-925

Abstract: Persistent price differences across euro area countries are an indication of incomplete economic integration. We analyse long†and short†run developments of price†level dispersion in the euro area and compare the results with price dispersion across US cities. We find that monetary and economic integration in Europe has been successful in establishing a major downward trend in price†level differences across countries since 1960. After the Global Financial Crisis and the European Sovereign Debt Crisis, diverging economic conditions across euro area countries led to higher income dispersion, which contributed to a widening of price†level differences again.

Date: 2018
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