EFZG working paper series, No. 04, 2018.
Other
Product market integration in the Euro area
Irena Raguž Krištić
; Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia
Lucija Rogić Dumančić
orcid.org/0000-0002-7963-4166
; Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia
Abstract
The goal of this paper is to determine if the euro area (EA) accession and membership had a significant impact on the product market integration in the EA countries. The paper employs LM and RALS-LM unit root tests with two breaks on the seasonally adjusted monthly Harmonized Index of Consumer Prices (HICP), from 1996:01 to 2017:05. We find EA-accession related breaks in most of the EA11 countries, but, apart from Malta, no such breaks for the later-EA-joiners. However, EA formation had a significant impact on both EA and non-EA countries at that time. We also find greater product market integration and less adverse effects after negative shocks in the EA member countries. However, based on unit root analysis, we find that EA membership in not a sufficient condition for product market integration and integration is not necessarily related to being an EA member.
Keywords
prices; Euro area; stochastic convergence; unit root; structural breaks
Hrčak ID:
203782
URI
Publication date:
17.7.2018.
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