A Comparison of Convergence in Good Prices with that of Service Prices Across Iranian Provinces

Kazerooni, Alireza; Asgharpur, Hosein; Rezaei, Khadijeh

doi:10.22059/jte.2014.52444

A Comparison of Convergence in Good Prices with that of Service Prices Across Iranian Provinces

Document Type : Research Paper

Authors

Alireza Kazerooni ¹

Hosein Asgharpur ²

Khadijeh Rezaei ³

¹ Professor, Economics Department, University of Tabriz

² Associate Professor, Economics Department, University of Tabriz

³ University of Tabriz, Economics Department

10.22059/jte.2014.52444

Abstract

The main purpose of this paper is to examine the convergence of price-levels of tradable goods in comparison to that of services (non-tradable) under the free trade among Iranian provinces over 2007- 2012. This comparison has been achieved by applying the pair-wise approach which has been recently developed by Pesaran (2005). In this approach, the time series models (ADF, DF-GLS and KPSS unit root tests) has been used. The empirical results confirm the hypothesis that the convergence of good prices is more than that of service prices. Also, the empirical results indicate that the average speed of convergence in price of goods in converged paired provinces is higher than the price of services.
JEL Classification: C32, E31, F15.

Keywords

convergence speed

Iranian Provinces

law of one price

pair-wise approach

price-level convergence