Comparative Price Levels of New EU Member Countries

Taušer Josef, Žamberský Pavel and Čajka Radek
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Taušer Josef: University of Economics, Prague
Žamberský Pavel: University of Economics, Prague
Čajka Radek: University of Economics, Prague

International Journal of Management and Economics, 2013, vol. 39, issue 1, 9-17

Abstract: This article analyzes comparative price levels of 10 new EU member countries from Central, East, and South-East Europe and discusses their main determinants. A comparison of comparative price levels is logically followed by a comparison of relative GDP per capita in purchasing power parities. Further, the Balassa-Samuelson efect is theoretically explained and empirically tested using a sample of EU27 countries (excluding Luxemburg). The results of simple regression analysis confrm that diferences in comparative price levels can be explained by the diferences in relative GDP per capita in purchasing power parities. Besides the Balassa-Samuelson efect there are, however, many other factors that have an impact on comparative price levels. Tey are related to the lower competitiveness of domestic companies on international markets as the result of such factors as a lower quality of production, inefcient organizational structures and management styles, insufcient marketing and business skills, or a poor approach to international distribution channels.

Keywords: Price convergence; comparative price levels; European Union; Balassa-Samuelson efect (search for similar items in EconPapers)
JEL-codes: F15 F31 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ijomae:v:39:y:2014:i:1:p:9-17:n:1

DOI: 10.2478/ijme-2014-0018

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