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Price-Level Convergence: New Evidence from U.S. Cities

Author

Listed:
  • M. Ege Yazgan

    (Department of Economics, Istanbul Bilgi University)

  • Hakan Yilmazkuday

    (Department of Economics, Temple University)

Abstract

This paper tests the bilateral price-level convergence among 52 U.S. cities at the good level. We employ a new approach which is free of problems that arise when using an arbitrary benchmark, cross-section dependence, and heterogeneity. We find quite strong evidence in favor of convergence with significantly quick rates. This finding is surprising as the estimated median half lives are far below the half lives found in the corresponding studies for the U.S.

Suggested Citation

  • M. Ege Yazgan & Hakan Yilmazkuday, 2010. "Price-Level Convergence: New Evidence from U.S. Cities," DETU Working Papers 1011, Department of Economics, Temple University.
    • Handle: RePEc:tem:wpaper:1011
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    References listed on IDEAS

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    More about this item

    Keywords

    Convergence; Micro-Level Prices; PPP Puzzle.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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