Regional inflation dynamics using space–time models

Marques, Helena, Pino, Gabriel and de Dios Tena Horrillo, Juan ORCID: 0000-0001-8281-2886 (2014) Regional inflation dynamics using space–time models. Empirical Economics, 47 (3). pp. 1147-1172.

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Abstract

This article provides empirical evidence of the role of spatial factors on the determination of inflation dynamics for a representative set of tradable commodities in Chile. We present a simple model that explains inflation divergence across regions in a monetary union with similar preferences as a consequence of the geographical allocation of producers in the different regions. Our results indicate that spatial allocation together with transport costs are important determinants of regional inflation, while macroeconomic common factors do not play an important role in this process. Existing literature had obtained the opposite result for Europe, and the reasons for this difference warrant further investigation. Moreover, we find that geographical distance seems to be a more appropriate measure of neighbourhood than the adjacency of regions. Our results are robust to different specifications, regression methods and product groupings.

Item Type:	Article
Depositing User:	Symplectic Admin
Date Deposited:	16 Sep 2015 14:14
Last Modified:	17 Dec 2022 01:17
DOI:	10.1007/s00181-013-0763-9
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/2026282