Author/Authors :
GHAURI, SAGHIR PERVAIZ State Bank of Pakistan, Pakistan , GHAURI, SAGHIR PERVAIZ Pakistan Institute of Development Economics, Pakistan , QAYYUM, ABDUL State Bank of Pakistan, Pakistan , QAYYUM, ABDUL Pakistan Institute of Development Economics, Pakistan , ARBY, MUHAMMAD FAROOQ State Bank of Pakistan, Pakistan , ARBY, MUHAMMAD FAROOQ Pakistan Institute of Development Economics, Pakistan
Abstract :
We examine convergence of prices among 35 Pakistani cities and also explore how location of cities affects the convergence. We have found that there is bilateral price-level convergence for only food group and speed of convergence is around 3 months. On the other hand, prices of non-food commodities have very low speed of adjustment with 20 months. As a result, the overall CPI basket (food and non-food combined) has a moderate speed of convergence – 8 months. Moreover, relative prices have been found sensitive to locality as well as distance among them.
Keywords :
Inflation , Price convergence , Law of one price , Relative price variability
