City relative price dynamics in Australia : are structural breaks important?

Nath, Hiranya K. & Sarkar, Jayanta (2014) City relative price dynamics in Australia : are structural breaks important? Economic Record, 90(288), pp. 33-48.

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Abstract

This paper examines the dynamic behaviour of relative prices across seven Australian cities by applying panel unit root test procedures with structural breaks to quarterly consumer price index data for 1972 Q1–2011 Q4. We find overwhelming evidence of convergence in city relative prices. Three common structural breaks are endogenously determined at 1985, 1995, and 2007. Further, correcting for two potential biases, namely Nickell bias and time aggregation bias, we obtain half-life estimates of 2.3–3.8 quarters that are much shorter than those reported by previous research. Thus, we conclude that both structural breaks and bias corrections are important to obtain shorter half-life estimates.

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1 citations in Scopus
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ID Code: 65644
Item Type: Journal Article
Refereed: Yes
DOI: 10.1111/1475-4932.12077
ISSN: 0013-0249
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2013 Economic Society of Australia
Copyright Statement: The definitive version is available at www3.interscience.wiley.com
Deposited On: 06 Jan 2014 00:32
Last Modified: 07 Apr 2015 07:30

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