Price Convergence in an Enlarged Internal Market
| Autor: | Kirsten Lommatzsch, Jiri Slacalek, Christian Dreger, Konstantin A. Kholodilin, Przemyslaw Wozniak |
|---|---|
| Rok vydání: | 2008 |
| Předmět: | |
| Zdroj: | Eastern European Economics. 46:57-68 |
| ISSN: | 1557-9298 0012-8775 |
| DOI: | 10.2753/eee0012-8775460504 |
| Popis: | This paper investigates the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On one hand, higher competition exerts downward pressure on prices because of lower markups. On the other hand, the catching-up process of lowincome countries leads to a rise in price levels and higher inflation over a transition period. Using comparative price levels for forty-one product categories, price convergence can be established. However, the speed of convergence is rather slow, with half-lives of approximately ten years. The enlargement has stimulated convergence slightly toward the mean price; this effect is robust across different groups of countries. Moreover, the driving forces of convergence are explored. In line with theoretical predictions, the rise in competition exerts downward pressure on prices, whereas catc... |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|