Price Index Convergence Among Provinces and Cities of Canada: 1978 - 2001

We study the convergence of price indices for Canadian provinces and cities for the period 1978-2001 for (a) ten provinces and nine commodity/price groups; and (b) fifteen cities a cross Canada and four commodity/price groups using panel unit root tests. The empirical results reject the unit root hypothesis for price data across provinces and cities. The estimated rate of convergence in Canada is comparatively faster than the rates for similar studies reported for U.S. c ities. The empirical results also reveal a relatively faster rate of convergence during the post-inflation targeting period (1991-2001), than earlier.