Price Convergence across Cities in Korea

• 발행기관: 한국자료분석학회
• 저자명: Sunghoon Sim
• 간행물 정보: 『Journal of The Korean Data Analysis Society (JKDAS)』Vol.15 No.1, 89~100쪽, 전체 12쪽
• 주제분류: 자연과학 > 통계학
• 파일형태: PDF
• 발행일자: 2013.02.28

영문 초록

This paper tests the price-level convergence among 33 cities in Korea by using a recently developed econometric approach (pairwise approach) by Pesaran (2007). This approach is free from the problems due to an arbitrary selection of a base city and due to a cross-section dependence. Moreover, the pairwise approach directly addresses the questions of what proportion of price differentials rejects the null of unit root. The model is estimated using monthly data series of consumer price indexes (CPI) ranging from 1995:01 through 2012:05. Based on our empirical results, the city prices are in favor of convergence since our results satisfy both cointegration condition and cotrending condition. Moreover, our estimated values of half lives are shorter than both those of previous intranational studies based on the panel framework and those found internationally. The result also reveals that intercity distances are a positive determinant of price convergence although its impact on the long-run price deviations appears to be very small. Our findings are consistent with the beliefs that markets are more closely integrated within countries and that market integration for Korean cities has increased over time.

목차

1. Introduction

2. General Discussion of the Methodology

3. Methodology

4. Empirical Results

5. Conclusion

References

키워드

CPI Price Convergence Pairwise Approach Half Lives