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Regional inflation dynamics using space-time models

Helena Marques, Gabriel Pino Saldías and Juan de Dios Tena ()

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: This paper provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe and the reasons for that difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions.

Keywords: regional inflation dynamics; space-time models; chile (search for similar items in EconPapers)
JEL-codes: C21 C23 E31 E52 E58 R11 (search for similar items in EconPapers)
Date: 2009
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https://crenos.unica.it/crenos/node/2453
https://crenos.unica.it/crenos/sites/default/files/WP_09-15_0.pdf (application/pdf)

Related works:
Journal Article: Regional inflation dynamics using space–time models (2014) Downloads
Working Paper: Regional inflation dynamics using space-time models (2009) Downloads
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