Distribution Dynamics of Food Price Inflation Rates in EU: An Alternative Conditional Density Estimator Approach

This paper examines the existence of convergence and distribution dynamics of food price inflation rateswithin the European Union. Differences in such specific price index inflation rates and changes in their regionaldistributions reflect largely differences and developments in market conditions and structures. Traditional measuresand approaches to β-convergence and σ-convergence, fail to capture sufficiently the evolving distributional dynamics.The latter includes possible mobility prospects within distributions and potential formation of clubs. To deal withthese issues, the paper adopts developments in the literature of non parametric econometric methods and employs analternative conditional density estimator as well. Implementation of this estimator is superior, not only to therestrictive discrete Markov chain approaches, but also to the usual estimation of conditional densities using stochastickernels. The adopted estimator has smaller integrated mean square error than the conventional estimators. Panel dataanalysis of β-convergence is conducted too, using panel unit root tests. Data used are the harmonized consumer priceindices of food and eleven specific food product groups for 15 European countries, older member states of the EU.Extracted evidence based on the estimates is presented, analyzed, and conclusions are discussed.