Price convergence patterns across U.S. States
Keywords: 
Price convergence
Club convergence
U.S. states
Issue Date: 
2019
Publisher: 
National Library of Serbia
ISSN: 
1452-595X
Citation: 
Christou, C. (Christina); Cuñado, J. (Juncal); Gupta, R. (Rangan). "Price convergence patterns across U.S. States". Panoeconomicus. 66 (2), 2019, 187 - 201
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 U.S. state variables, and the different effects that national monetary policy decisions will have on U.S. state prices.

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