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Ensayos sobre POLÍTICA ECONÓMICA
Print version ISSN 0120-4483
Abstract
MONGE, Alvaro and WINKELRIED, Diego. PPP AND PRICE CONVERGENCE: ANALYSIS FOR PERUVIAN CITIES. Ens. polit. econ. [online]. 2009, vol.27, n.spe58, pp.56-104. ISSN 0120-4483.
This paper enquires whether the purchasing power parity theory (understood as price convergence) holds among Peruvian cities, to explore the degree of economic integration among Peruvian regions. We identify several factors affecting the real exchange rate among cities and find fiscal policy, precisely the distribution of public investment on capital across cities, to be an important determinant of price convergence.
Keywords : price convergence; panel data; commercial integration; (non) tradable goods.