Complete or Partial Inflation Convergence in the EU?

Consuelo Gámez Amián () and Amalia Morales Zumaquero. ()
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Consuelo Gámez Amián: Universidad de Málaga, http://www.uma.es
Amalia Morales Zumaquero.: University of Málaga and CentrA., http://www.uma.es

No E2002/09, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper has one primary aim: to analyze whether there exists evidence in favor of inflation convergence, complete convergence, or common trends, partial convergence, within the European Union (EU). The analysis is done in a bivariate and multivariate framework, for traded and non-traded inflation rates, using sequential unit root tests, common trends analysis, and cointegration tests that allow for structural breaks. The results suggest that there is a di¤erent behavior between traded and non-traded inflation rates. In the bivariate framework, there is much stronger evidence of complete convergence for traded inflation rates than for non-traded inflation rates. In the multivariate framework, the complete convergence is only presented in the most tradeable inflation rate and there is a small number of common trends for the rest of traded inflation rates that suggests evidence of partial convergence in terms of long-run relationships. Finally, neither complete nor partial convergence is presented in the non-traded inflation rates.

Keywords: convergence; common trends; structural breaks; traded and nontraded inflation rates; European Union. (search for similar items in EconPapers)
JEL-codes: C22 C32 E31 F15 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2002
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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