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Are global prices converging or diverging?

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  • Reuven Glick

Abstract

This Economic Letter reports on recent research that analyzes trends in global prices over the past decade and a half (Bergin and Glick 2007). It finds that, in fact, according to one measure, there was a trend of convergence from 1990 through 1997, which is consistent with the view that the world has become increasingly more trade-integrated over time, due to fewer governmental barriers and declining costs for transportation and communication. Somewhat surprisingly, however, it also finds that this trend was interrupted and then reversed in subsequent years, implying a general U-shaped pattern over the past one and a half decades. In exploring possible factors accounting for this reversal, a likely suspect turns out to be the hike in oil prices in recent years, which has raised transportation costs.

Suggested Citation

  • Reuven Glick, 2007. "Are global prices converging or diverging?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug10.
    • Handle: RePEc:fip:fedfel:y:2007:i:aug10:n:2007-24
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    Cited by:

    1. Mario Crucini & Christopher Telmer, 2020. "Microeconomic Sources of Real Exchange Rate Variation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 38, pages 22-40, October.

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    Keywords

    Prices;

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