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Price Level Convergence Among United States Cities: Lessons for the European Central Bank / Stephen G. Cecchetti, Nelson C. Mark, Robert J. Sonora.
- Format:
- Book
- Author/Creator:
- Cecchetti, Stephen G.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w7681.
- NBER working paper series no. w7681
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Price Level Convergence Among United States Cities
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2000.
- Summary:
- We study the dynamics of price indices for major U.S. cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate. In a panel of 19 cities from 1918 to 1995, we estimate the half-life of convergence to be approximately nine years. These estimates provide an upper bound on speed of convergence that participants in European Monetary Union are likely to experience. The surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs, differential speeds of adjustment to small and large shocks, and the inclusion of non-traded good prices in the overall price index.
- Notes:
- Print version record
- May 2000.
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