Price variability and price convergence: Evidence from Indonesia

Rizki Wimanda ()

Journal of Asian Economics, 2009, vol. 20, issue 4, 427-442

Abstract: This paper evaluates price variability and price convergence in Indonesia. Using price indices of 35 products in 45 cities from January 2002 to April 2008, this study shows that, during the observed period, prices in Indonesia converged to the 'relative' law of one price. The price variability of one product across cities is found to be smaller than the price variability of all products within a city. Transportation costs and the level of development matter to price variability. This study also reveals that the average speed of convergence, which is measured by the half-life, for perishable goods is about 9 months, non-perishable goods 32-36 months, and services 18-19 months, while the median of the half-life of all products is about 16-17 months. The speed of convergence depends on the initial price difference, but not the distance between cities.

Keywords: Half-life; Price; convergence; Law; of; one; price; Indonesia (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1049-0078(09)00058-X
Full text for ScienceDirect subscribers only

Related works:
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:eee:asieco:v:20:y:2009:i:4:p:427-442

Access Statistics for this article

Journal of Asian Economics is currently edited by C. Wiemer

More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().