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On the Evolution of Relative Prices and Its Nature at the Regional Level: The Case of Spain
Author(s) -
Alberola Enrique,
Marqués José Manuel
Publication year - 2001
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/0022-4146.00226
Subject(s) - inflation (cosmology) , economics , relative price , point (geometry) , european monetary union , wage , relevance (law) , price level , contrast (vision) , european union , international economics , macroeconomics , monetary policy , labour economics , political science , physics , geometry , mathematics , artificial intelligence , theoretical physics , computer science , law
This paper studies the relevance and nature of shifts in relative prices at the regional level in Spain. Deviations in relative prices tend to be small (at most half a point of inflation annually) but persistent. They are determined by features intrinsic to deep economic integration, in particular, wage mechanisms operating at the national level. This is in stark contrast to evidence at the international level. Therefore, while acknowledging that divergent price evolutions are possible in the European Monetary Union, their nature will be different from those observed among Spanish regions.