Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78100
Authors: 
Weber, Axel A.
Beck, Guenter
Year of Publication: 
2003
Series/Report no.: 
CFS Working Paper 2001/07
Abstract: 
We use consumer price data for 81 European cities (in Germany, Austria, Finland, Italy, Spain, Portugal and Switzerland) to study the impact of the introduction of the euro on goods market integration. Employing both aggregated and disaggregated consumer price index (CPI) data we confirm previous results which showed that the distance between European cities explains a significant amount of the variation in the prices of similar goods in different locations. We also find that the variation of relative prices is much higher for two cities located in different countries than for two equidistant cities in the same country. Under the EMU, the elimination of nominal exchange rate volatility has largely reduced these border effects, but distance and border still matter for intra-European relative price volatility.
Subjects: 
relative price volatility
real exchange rates
law of one price
purchasing power parity
goods market integration
border effects
EMU
JEL: 
F02
F40
F41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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