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Price convergence in the EMU? Evidence from micro data

Christoph Fischer

No 2009,06, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: The establishment of European monetary union (EMU) was widely expected to cause price convergence among member states. In an investigation of this claim, the present study avoids problems of comparability and representativeness by using an extremely detailed and comprehensive scanner database on washing machine prices and sales volumes for 17 European countries. A hedonic regression yields country-specific time series for quality-adjusted price differentials. Statistically and economically significant deviations from the LOP emerge. Log t tests firmly reject price convergence among EMU countries. Small convergence clusters can be identified but they are unrelated to EMU membership.

Keywords: price convergence; LOP; euro introduction; log t test; hedonic price regression; scanner data (search for similar items in EconPapers)
JEL-codes: E31 F31 F36 C23 L68 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba and nep-eec
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Journal Article: Price convergence in the EMU? Evidence from micro data (2012) Downloads
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