Persistence of prices in the Eurozone capital cities: Evidence from the Economist Intelligence Unit City Data

Purchasing Power Parity under Tourism Price Indices: An Analysis for Euro Area

“…The results are robust to the observed time intervals, applied unit root tests, chosen base currencies and the selected tourism price indices. The validity of the PPP established in this inquiry is consistent with the work of Ogrokhina (2019) for the Eurozone, where only short-run deviations of relative prices for traded and nontraded goods from their parity values are reported. Additionally, our empirical estimates are in harmony with the increasing tradability of services (Rabe & Waddle, 2020) and with the significance of the tourism industry in shaping relative prices and income levels among economies (Tubadji & Nijkamp, 2018).…”

Eurozone Prices: A Tale of Convergence and Divergence

“…The literature provides different reasons for the persistence of price level gaps over time, from non-harmonized data-production methodologies across statistical offices to several economic reasons such as heterogeneous productivity, labor market frictions, and trade barriers. More recently, Dvir and Strasser (2018) and Ogrokhina (2019) report empirical evidence against the Law of One Price holding in the EMU, 8 making it interesting to determine how long deviations from the steady-state inflation rate tend to persist over time. This analysis will require to estimate the persistence in the price level gaps, the portion of the gap that has been reduced, and the long-term remaining gap.…”