The convergence of inflation rates in the EU-12 area: A distribution dynamics approach

Cavallero, Alessandro

doi:10.1016/j.jmacro.2011.02.001

Cited by 9 publications

(11 citation statements)

References 24 publications

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“…For a further investigation of the distribution of food inflation rates in the Euro-zone, the results of the distribution dynamics using stochastic kernels are accompanied with a Markov transition probability matrix (Table 3). Following Cavallero [54], three states are considered for the construction of this matrix. The first state represents low inflation countries (with respect to the areawide mean, henceforth, L-state); the second state stands for countries with inflation performances in line with the areawide mean, therefore it represents the "convergence" state (henceforth, C-state); the third state represents high inflation countries (with respect to the areawide mean, henceforth, H-state).…”

Section: Resultsmentioning

confidence: 99%

“…Recently, another methodological tool, the distribution dynamics analysis, borrowed from the economic growth literature, has also been introduced in the analysis of inflation rates differentials. The study of Cavallero [54] presents an example of this alternative approach. After the decomposition of the EU-12 inflation series into trend and cyclical component, Cavallero [54] concludes that inflation trends converged, although the convergence process was not constant over time.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The study of Cavallero [54] presents an example of this alternative approach. After the decomposition of the EU-12 inflation series into trend and cyclical component, Cavallero [54] concludes that inflation trends converged, although the convergence process was not constant over time. Especially the launch of the EMU and the introduction of a single currency have boosted convergence.…”

Section: Literature Reviewmentioning

confidence: 99%

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Food Price Inflation Rates in the Euro Zone: Distribution Dynamics and Convergence Analysis

Liontakis

2012

Economics Research International

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It is widely recognized that inflation as a monetary phenomenon is determined by money supply changes. In the short run, however, several factors may lead to inflation rate differentials among different regions in the same country or among different countries in a monetary union. This paper examines the mean reversion attitude of food price inflation rates in the Euro zone, borrowing the concepts and developments from the recent growth literature and using panel unit root tests. Additionally, in order to capture sufficiently the evolving distributional dynamics, nonparametric econometric methods are also implemented. Finally, the comovement of the inflation rates among different food subgroups is also explored. The data consist of monthly observations of the EU harmonized consumer price indices of food and three different food subgroups (meat, bread and cereals, and vegetables) for the 12 older member states of the Euro zone, covering the period from 1997 to 2010. The results do not fully support the hypothesis of the food price inflation rates convergence for the whole period under investigation. Mean reversion shows up in different time periods and in different food categories. Moreover, the analysis of distribution dynamics sheds light to different aspects of convergence and highlights processes like club formation and polarization.

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Section: Resultsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Food Price Inflation Rates in the Euro Zone: Distribution Dynamics and Convergence Analysis

Liontakis

2012

Economics Research International

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“…We can then position the 11 countries on a plane, by simply plotting the points x i . 7 The most interesting characteristic present in the map is that two clusters of countries emerge. One cluster is formed by Mediterranean countries, France, Italy, Portugal and Spain.…”

Section: Our Data: First Characterizationmentioning

confidence: 99%

Inflation Rate Dynamics Convergence within the Euro

Soares

Aguiar‐Conraria

2014

Lecture Notes in Computer Science

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Abstract. In this paper we use wavelet analysis to address the problem of inflation dynamics convergence in the Euro area. The study is conducted for the 11 countries that first joined the Euro. We use a dissimilarity measure derived in the time-frequency space to estimate the degree of inflation synchronization among these countries. With this measure, we fill a dissimilarity matrix which, with multidimensional scaling, is then used to plot the different countries in a plane. Our results indicate that the degree of inflation cycles synchronization is much stronger before than after the Euro. For example, while before the Euro, Portuguese inflation is synchronized with the inflation in six other countries, after the Euro adoption any statistical evidence of synchronization disappears.

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“…Very similar to the case of supplyside convergence, this result suggests that the expected effects of the single currency on multilateral monetary convergence began to be effectively generated only recently (in 2009). Indeed, Cavallero (2011) has reported that some country-specific institutional structures could explain the limited monetary convergence in the euro group prior to 2007. Lopez and Papell (2012) has found that inflation rates in the euro zone began to converge together, especially after the crisis of 2007~2009.…”

Section: E Dynamic Real Demand Convergencementioning

confidence: 99%

Convergence in the Core Euro Zone under the Global Financial Crisis

Lee

Mercurelli

2014

JEI

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A lack of economic convergence among euro member countries seems to be feeding euro-skepticism. Using a Structural Vector Auto Regression model combined with a time varying correlation analysis, we attempt to test the endogeneity theory for the three core euro members, i.e., France, Germany, and Italy. We provide evidence that the adoption of the euro has increased the symmetry of underlying shocks and accelerated the convergence process within this group. Even though the global crisis of 2007~2009 disturbed the European convergence process, the expected endogeneity effects continue to be generated, and the euro-skepticism is not corroborated.

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The convergence of inflation rates in the EU-12 area: A distribution dynamics approach

Cited by 9 publications

References 24 publications

Food Price Inflation Rates in the Euro Zone: Distribution Dynamics and Convergence Analysis

Food Price Inflation Rates in the Euro Zone: Distribution Dynamics and Convergence Analysis

Inflation Rate Dynamics Convergence within the Euro

Convergence in the Core Euro Zone under the Global Financial Crisis

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