Price level convergence and regional Phillips curves in the US and EMU

JM (Jan Marc) Berk; Job Swank

doi:10.1016/j.jimonfin.2011.05.002

Price level convergence and regional Phillips curves in the US and EMU

JM (Jan Marc) Berk, Job Swank

Research output: Contribution to journal › Article › Academic › peer-review

4 Citations (Scopus)

Abstract

We use panel estimates of regional Phillips curves of the hybrid New Keynesian type to study price level convergence within the US and EMU. Regional inflation rates tend to eliminate PPP deviations in both monetary unions, with average half-lives around 3½ years. The start of EMU did not greatly affect PPP reversion in the euro area. Where changes in nominal exchange rates accounted for the bulk of the adjustment process before 1999, this role was largely taken over by regional inflation differences since. Notwithstanding clear evidence of forward-lookingness in the US, inflation persistence is substantial in both monetary unions.

Original language	English
Pages (from-to)	749-763
Number of pages	15
Journal	Journal of International Money and Finance
Volume	30
Issue number	5
DOIs	https://doi.org/10.1016/j.jimonfin.2011.05.002
Publication status	Published - 2011

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10.1016/j.jimonfin.2011.05.002

http://hdl.handle.net/1765/26088

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Price level convergence and regional Phillips curves in the US and EMU

Abstract

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