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.

Regional inflation dynamics using space-time models / Marques, H; Pino, G; TENA HORRILLO, Juan de Dios. - In: EMPIRICAL ECONOMICS. - ISSN 0377-7332. - 47:3(2014), pp. 1147-1172. [10.1007/s00181-013-0763-9]

Regional inflation dynamics using space-time models

TENA HORRILLO, Juan de Dios
2014-01-01

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.
2014
Regional inflation dynamics using space-time models / Marques, H; Pino, G; TENA HORRILLO, Juan de Dios. - In: EMPIRICAL ECONOMICS. - ISSN 0377-7332. - 47:3(2014), pp. 1147-1172. [10.1007/s00181-013-0763-9]
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11388/59078
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 12
  • ???jsp.display-item.citation.isi??? 10
social impact