Regional inflation and industrial structure in monetary union

Nagayasu, Jun (2012): Regional inflation and industrial structure in monetary union.

Abstract

It is often argued that an optimal currency area requires homogeneous regional inflation. However, previous empirical studies point out heterogeneity in sectoral inflation and geographical concentration of industries within a monetary union. It follows that there must be a difference in regional inflation in such a union. We examine this view using regional data from Japan which has experienced a period of rapid change in industrial structure, and show that economic structure is closely related to heterogeneous regional inflation. This study suggests that heterogeneous inflation can be a prevailing and long-lasting phenomenon in a monetary union.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regional inflation, Monetary union, Optimal currency area, Industrial structure
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

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