Price Convergence Patterns across U.S. States

  • Christina Christou University of Pireaus, Department of Banking & Financial Management, Greece
  • Juncal Cunado University of Navarra, School of Economics, Spain
  • Rangan Gupta University of Pretoria, Department of Economics, South Africa

Abstract

This study examines the convergence patterns of prices across 50 U.S. states over the period 1960-2007, by applying the convergence algorithm developed by Peter C.B. Phillips and Donggyu Sul (2007). The empirical findings suggest the rejection of full convergence across the 50 U.S. states' prices, and the presence of 11 subgroups, or convergence clubs. The main implications of this paper point to the low degree of market integration across the U.S. states, the limitations of using a unique national price deflator to calculate real US U.S. state variables, and the different effects that national monetary policy decisions will have on U.S. state prices.


Key words: Price converge, Club convergence, U.S. states.
JEL: C33, E31, R10.


Obrasci konvergencije cena širom SAD


Ova studija razmatra obrasce konvergencije cena u 50 američkih država u periodu 1960-2007, primenjujući algoritam konvergencije koji su razvili Peter C. B. Phillips i Donggyu Sul (2007). Empirijski nalazi ukazuju na odbacivanje potpune konvergencije cena 50 američkih država i prisustvo 11 podgrupa ili klubova konvergencije. Glavne implikacije ovog rada ukazuju na nizak stepen integracije tržišta u američkim državama, ograničenje korišćenja jedinstvenog nacionalnog deflatora cena za izračunavanje stvarnih varijabli američke države, kao i različite efekte koje će nacionalne odluke o monetarnoj politici imati na cene SAD.


Ključne reči: Konvergencija cena, klub konvergencija, američke države.


 

How to Cite
Christou C., Cunado J., & Gupta R. (2018). Price Convergence Patterns across U.S. States. Panoeconomicus, 66(2), 187-201. doi:10.2298/PAN160625008C
Section
Original scientific paper