Template-type: ReDIF-Paper 1.0
Author-Name: Alfredo García Hiernaux 
Author-Workplace-Name: Departamento de Fundamentos del Análisis Económico II (Economía Cuantitativa). Universidad Complutense de Madrid.
Author-Workplace-Homepage: https://www.ucm.es/fundamentos-analisis-economico2
Author-Name: David Esteban Guerrero Burbano
Author-Workplace-Name: CUNEF. Colegio Universitario de Estudios Financieros.
Title: Price-Level Convergence in the Eurozone
Abstract: This paper shows that price level trends in many of the EMU countries evolve with different patterns and 
	that these patterns will not converge in the long-run. We propose that the hypothesis of price convergence 
	should be evaluated and tested employing the relative prices. To this aim, we: (i) define the asymptotic 
	price level convergence in mean and variance, (ii) provide a model for relative price levels that includes 
	a transition path, and (iii) show how to properly test the definitions stated. Our results show that only 
	French and German price levels converge in mean to a zero gap in the EMU while some others, not many, 
	converge to a nonzero significant gap. This should be a matter of concern for the European monetary policy 
	makers as it implies that the monetary policy does not affect all the EMU members equally.
Classification-JEL: E30, E31, E52, C22, F15.
Keywords: Price convergence; Price levels; Relative price; Inflation; EMU.
Length: 27 pages
Creation-Date: 2015-05  
Number: 2015-05 
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae1505.txt
File-URL: https://eprints.ucm.es/id/eprint/30038/1/Doc.%201505.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doicae:1505