We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Drivers of inflation convergence across countries: the role of standard gravity variables.
- Authors
Yilmazkuday, Hakan
- Abstract
Using monthly headline inflation data covering 184 countries for the period between January 1971 and December 2020, this paper investigates the role of standard gravity variables on inflation convergence across country pairs. The convergence analysis by unit root tests is based on ten-year rolling windows to control for potential structural changes over time, whereas the corresponding results are connected to the standard gravity variables in the preceding year to investigate the drivers of inflation convergence and its speed. Regarding the existence of inflation convergence, empirical results show that having a common currency, a free trade agreement, proximity, a common border, or a colonial relationship between countries increases the probability of inflation convergence. Regarding the speed of inflation convergence, the very same gravity variables are shown to reduce the half-life of convergence. In both cases, the effects of having a common currency are shown to dominate those of other gravity variables.
- Subjects
PRICE inflation; GRAVITY; MONETARY unions; FREE trade; COUNTRIES
- Publication
Macroeconomic Dynamics, 2023, Vol 27, Issue 6, p1664
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100522000396