Does Value Chain Integration Dampen Producer Price Developments? Evidence from the European Union

Klaus Friesenbichler, Agnes Kügler and Andreas Reinstaller ()

No 602, WIFO Working Papers from WIFO

Abstract: We draw on trade theory to empirically explore the effects of value chain integration on producer price dynamics. Using the EU as an example of an integrated area, we construct measures of backward and forward linkages with intra- and extra-EU trading partners at the country-sector level. We find that especially upstream integration and EU-accession dampen inflation. The results for downstream integration indicate a price-increasing relationship. We propose novel EU integration indicators and offer insights to both theory and applied research. We also add to the policy debate on the price effects of (dis-)integration of EU countries.

Keywords: inflation; EU integration; Single Market; producer prices; value chains (search for similar items in EconPapers)
Pages: 30 pages
Date: 2020-06
New Economics Papers: this item is included in nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Does value chain integration dampen producer price developments? Evidence from the European Union (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2020:i:602

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