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Paper Information

Journal:   IRANIAN JOURNAL OF TRADE STUDIES (IJTS)   SPRING 2017 , Volume 21 , Number 82 ; Page(s) 153 To 175.
 
Paper: 

INVESTIGATION OF FACTORS AFFECTING ON PRICE LEVEL CONVERGENCE AMONG THE IRAN'S PROVINCES

 
 
Author(s):  POUREBAD ALHAN MOHSEN, FALLAHI FIROUZ, AZARI ZAHRA
 
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Abstract: 

The lower rate of the trade and nontrade barriers inside a country compared with the international scale makes the establishment of the law of one price possible and increases the probability of price convergence in that country. However, the price convergence can be influenced by climatical, geographical, economical and… conditions so that, as time passes, the price will not be consistent in different locations of the same country and the convergence of prices will not be possible in those locations. The present study examines the factors influencing the convergence of prices among Iran's provinces during years 2007: 4-2014: 3. In the first step for achieving this purpose, the convergence of prices among various provinces was examined by using pairwise approach of Pesaran (2007). The results indicate that the null hypothesis of no convergence is rejected, but also that a substantial portion of price levels fail to converge. For studying the factors which influence the convergence of prices the Probit model was used. The results indicated that the convergence probability is influenced by the growth rate of the per capita income so that with different growth rates of per capita income, the convergence in Iran's provinces is unlikely during the examined period.

 
Keyword(s): CONVERGENCE, PRICE LEVEL, PAIRWISE APPROACH, FACTORS AFFECTING ON PRICE LEVEL CONVERGENCE, PROBIT MODEL
 
References: 
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