Merging the Purchasing Power Parity and the Phillips Curve Literatures: Regional Evidence from Italy

Andrea Vaona

No 33/2006, Working Papers from University of Verona, Department of Economics

Abstract: The main purpose of this paper is to merge together two strands of the literature regarding, either directly or indirectly, infation: the PPP and the Phillips curve ones. In order to accomplish this task, this contribution applies the tools of the Empirical Growth Literature and of Dynamic Panel Data estimation on a sample of 81 Italian provinces from the year 1986 to the year 1998, exploiting cross-sectional variation to avoid to use instruments not directly connected with the inflation generating process. This research strategy allows to conclude that inflation is characterized by a low degree of persistence and by conditional B-convergence across provinces. Its most suitable driving vari- able is the unemployment rate and there are long-term non neutralities at the regional level.

Keywords: Phillips Curve; Regions; Inflation (search for similar items in EconPapers)
JEL-codes: E31 E32 R10 (search for similar items in EconPapers)
Pages: 39
Date: 2006-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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