TY - JOUR
T1 - Price index convergence among United States cities
AU - Cecchetti, Stephen G.
AU - Mark, Nelson C.
AU - Sonora, Robert J.
PY - 2002/11
Y1 - 2002/11
N2 - We study the dynamics of price indices for major U.S. cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate. In a panel of 19 cities from 1918 to 1995, we estimate the half-life of convergence to be approximately nine years. The surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs, differential speeds of adjustment to small and large shocks, and the inclusion of nontraded goods prices in the overall price index.
AB - We study the dynamics of price indices for major U.S. cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate. In a panel of 19 cities from 1918 to 1995, we estimate the half-life of convergence to be approximately nine years. The surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs, differential speeds of adjustment to small and large shocks, and the inclusion of nontraded goods prices in the overall price index.
UR - http://www.scopus.com/inward/record.url?scp=0036852569&partnerID=8YFLogxK
U2 - 10.1111/1468-2354.t01-1-00049
DO - 10.1111/1468-2354.t01-1-00049
M3 - Article
AN - SCOPUS:0036852569
SN - 0020-6598
VL - 43
SP - 1081
EP - 1099
JO - International Economic Review
JF - International Economic Review
IS - 4
ER -
