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Complete or Partial Inflation Convergence in the EU?

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This paper has one primary aim: to analyze whether there exists evidence in favor of inflation convergence, complete convergence, or common trends, partial convergence, within the European Union (EU). The analysis is done in a bivariate and multivariate framework, for traded and non-traded inflation rates, using sequential unit root tests, common trends analysis, and cointegration tests that allow for structural breaks. The results suggest that there is a di¤erent behavior between traded and non-traded inflation rates. In the bivariate framework, there is much stronger evidence of complete convergence for traded inflation rates than for non-traded inflation rates. In the multivariate framework, the complete convergence is only presented in the most tradeable inflation rate and there is a small number of common trends for the rest of traded inflation rates that suggests evidence of partial convergence in terms of long-run relationships. Finally, neither complete nor partial convergence is presented in the non-traded inflation rates.

Suggested Citation

  • Consuelo Gámez Amián & Amalia Morales Zumaquero., 2002. "Complete or Partial Inflation Convergence in the EU?," Economic Working Papers at Centro de Estudios Andaluces E2002/09, Centro de Estudios Andaluces.
    • Handle: RePEc:cea:doctra:e2002_09
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    File URL: http://public.centrodeestudiosandaluces.es/pdfs/E200209.pdf
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    1. repec:lan:wpaper:2440 is not listed on IDEAS
    2. Salvador Gil-Pareja & Simon Sosvilla-Rivero, 2007. "Price convergence in the European car market," Applied Economics, Taylor & Francis Journals, vol. 40(2), pages 241-250.
    3. Giulio Palomba & Emma Sarno & Alberto Zazzaro, 2009. "Testing similarities of short-run inflation dynamics among EU-25 countries after the Euro," Empirical Economics, Springer, vol. 37(2), pages 231-270, October.
    4. repec:lan:wpaper:2442 is not listed on IDEAS
    5. repec:lan:wpaper:2668 is not listed on IDEAS
    6. repec:lan:wpaper:2522 is not listed on IDEAS
    7. A M Spiru, 2007. "Inflation convergence in the new EU member states," Working Papers 590260, Lancaster University Management School, Economics Department.
    8. Alina M. Spiru, 2008. "Inflation Convergence In Central And Eastern European Economies," Romanian Economic Business Review, Romanian-American University, vol. 3(4), pages 14-34, Winter.
    9. PIROVANO, Mara & VAN POECK, André, 2011. "Eurozone inflation differentials and the ECB," Working Papers 2011014, University of Antwerp, Faculty of Business and Economics.
    10. Alina M. Spiru, 2008. "Inflation Convergence In Central And Eastern European Economies," Journal of Information Systems & Operations Management, Romanian-American University, vol. 2(1), pages 289-316, July.

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    More about this item

    Keywords

    convergence; common trends; structural breaks; traded and nontraded inflation rates; European Union.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F15 - International Economics - - Trade - - - Economic Integration

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