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Price convergence in the EMU? Evidence from micro data

Christoph Fischer

European Economic Review, 2012, vol. 56, issue 4, 757-776

Abstract: The establishment of the European Monetary Union (EMU) was widely expected to cause price convergence among member states. In an investigation of this claim, the present study avoids problems of comparability and representativeness by using an extremely detailed and comprehensive scanner database on washing machine prices and sales volumes for 17 European countries. A hedonic regression yields country-specific time series for quality-adjusted price differentials. Statistically and economically significant deviations from the Law of One Price emerge. Logt tests firmly reject price convergence among EMU countries. Small convergence clusters can be identified but they are unrelated to EMU membership.

Keywords: Price convergence; Law of One Price; Euro introduction; Logt test; Hedonic price regression; Scanner data (search for similar items in EconPapers)
JEL-codes: F36 F31 E31 L68 C23 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Price convergence in the EMU? Evidence from micro data (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:56:y:2012:i:4:p:757-776

DOI: 10.1016/j.euroecorev.2012.01.008

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