We combine panel data with SVECM methodologies to assess the role of real shocks in deter-mining price differentials in Italy. The main results can be summarized as follows. At a national level, we find strong evidence of persistent price and productivity misalignments across regions. In accordance with the Balassa-Samuelson Hypothesis, such misalignments are positively corre-lated in all samples. Aggregate productivity seems to be the driving force at the national level. The adjustment mechanism is rather intricate and changes across the country. The retrieval of the structural coefficients is also rich in powerful insights into the functioning of the Italian economy.
On the nature of regional price differentials: Some panel results for Italy
MASSIDDA, CARLA;MATTANA, PAOLO
2006-01-01
Abstract
We combine panel data with SVECM methodologies to assess the role of real shocks in deter-mining price differentials in Italy. The main results can be summarized as follows. At a national level, we find strong evidence of persistent price and productivity misalignments across regions. In accordance with the Balassa-Samuelson Hypothesis, such misalignments are positively corre-lated in all samples. Aggregate productivity seems to be the driving force at the national level. The adjustment mechanism is rather intricate and changes across the country. The retrieval of the structural coefficients is also rich in powerful insights into the functioning of the Italian economy.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
