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Testing for Inflation Convergence Among European Union Countries: A Panel Approach
Tsafa-Karakatsanidou, Maria | Fountas, Stilianos
Applied Economics Quarterly, Vol. 64 (2018), Iss. 1 : pp. 17–37
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Tsafa-Karakatsanidou, Maria, Department of Economics, University of Macedonia, Greece.
Fountas, Stilianos, Department of Economics, University of Macedonia, Greece. Tel: +30 2310 891774, Fax: +30 2310 891292.
Cited By
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Introduction to the Special Issue on Applied Macroeconomics, Finance, and Banking
Fountas, Stilianos
Applied Economics Quarterly, Vol. 64 (2018), Iss. 1 P.1
https://doi.org/10.3790/aeq.64.1.1 [Citations: 0]
Abstract
Abstract
This paper attempts to test for inflation convergence in a sample of 24 European Union countries. To tackle this issue, first- and second-generation panel unit root and stationarity tests are employed so as to provide evidence of inflation convergence before and after the launch of the single currency, the euro. We also test for and then allow for cross-sectional dependence. In general, the findings reveal that conditional inflation convergence exists for all panels under study. The estimation of half lives shows that the evidence for faster speed of convergence applies for the new member states followed by the core countries and the old member states.
JEL classifications: C33, E3, F33
Keywords: Inflation Convergence, EU, Maastricht Criteria, Panel data
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Maria Tsafa-Karakatsanidou / Stilianos Fountas: Testing for Inflation Convergence Among European Union Countries: A Panel Approach | 1 | ||
| Abstract | 1 | ||
| 1. Introduction | 1 | ||
| 2. Empirical Literature | 3 | ||
| 3. Data and Econometric Methodology | 5 | ||
| 3.1 Data Description | 5 | ||
| 3.2 Methodology and Inflation Differentials | 6 | ||
| 3.3 Panel Unit Root Tests | 1 | ||
| 3.4 Second Generation Panel Unit Root Tests | 1 | ||
| 4. Empirical Results | 1 | ||
| 4.1 Panel Unit Root Tests and Half-lives | 1 | ||
| 4.2 Discussion | 1 | ||
| 5. Conclusions | 1 | ||
| References | 2 |