Behavior of retail prices in common currency areas: The case of the Eurozone

Nikolsko-Rzhevskyy, Alex; Ogrokhina, Olena

doi:10.1016/j.econmod.2017.09.005

Cited by 3 publications

(1 citation statement)

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“…There is a body of literature that finds positive effects of EA membership (Estrada et al 2013;Nikolsko-Rzhevskyy and Ogrokhina 2018) and common currency (Isgut 2004;Allington et al 2005; Glushenkova and Zachariadis 2014) on price convergence, using differences-in-difference (DID), cross-sectional, panel data approach, and relative price dispersion measures 1 . Alternatively, others find no significant effects of EA membership and euro using panel data analysis (Parsley and Wei 2001;Fischer 2012), cross-sectional and DID approach (Lutz 2003;Parsley and Wei 2008).…”

Section: Literature Reviewmentioning

confidence: 99%

Euro Area Product Market Integration

Krištić

Dumančić

2022

South East European Journal of Economics and Business

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The goal of this paper is to determine if there is product market integration in the euro area (EA). The paper employs LM and RALS-LM unit root tests with two breaks on the relative price series, constructed using the seasonally adjusted monthly Harmonized Index of Consumer Prices (HICP), from 1996:01 to 2017:05. The analysis shows EA-accession related breaks in price series for most of the EA11 countries, but, apart from Malta, no such breaks for the later-EA-joiners. However, there are breaks in both EA and non-EA countries at the time of EA formation. There is also evidence of greater product market integration and less adverse effects after negative shocks in the EA12. However, unit root analysis points to a conclusion that EA membership is not a sufficient condition for product market integration and integration is not necessarily related to being an EA member.

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