DO PRICES CONVERGE AMONG INDONESIAN CITIES? AN EMPIRICAL ANALYSIS

Authors

Bhushan Praveen Jangam, Indian Institute of Technology Hyderabad, IndiaFollow
Vaseem Akram, Indian Institute of Technology Hyderabad, IndiaFollow

Document Type

Article

Abstract

We investigate consumer price convergence for 82 Indonesian cities using monthly data from 2014 to 2019. To do so, we employ recent techniques of club convergence and weak sigma convergence. The results reveal, first, consumer price divergence, implying price rigidities across the cities. Second, we find four clubs, suggesting that Indonesian cities converge along four unique transition paths. Third, we find weak evidence of consumer price convergence, suggesting that prices among Indonesian cities adjust, but not freely. Policy should therefore consider unique convergence paths for each club to promote stronger consumer price convergence.

Recommended Citation

Jangam, Bhushan Praveen and Akram, Vaseem (2019) "DO PRICES CONVERGE AMONG INDONESIAN CITIES? AN EMPIRICAL ANALYSIS," Bulletin of Monetary Economics and Banking: Vol. 22: No. 3, Article 3.
DOI: https://doi.org/10.21098/bemp.v22i3.1152
Available at: https://bulletin.bmeb-bi.org/bmeb/vol22/iss3/3

First Page

239

Last Page

262

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

India

Affiliation

Indian Institute of Technology Hyderabad