Using annual consumer price index (CPI) data for 17 U.S. cities between 1918 and 2007, this paper examines the implications of the choice of numeraire city for the behavior of relative prices across cities. A common factor representation of relative price is used to understand the nature of the...

This paper examines price index convergence among U. S. cities by applying panel unit root test procedures that allow for structural breaks to annual CPI data between 1918 and 2010 for 17 major cities. With an endogenously determined single break in 1985, and two breaks in 1943 and 1990...

Estimates of the half-life to convergence of prices across a panel of cities are subject to bias from three potential sources: inappropriate cross-sectional aggregation of heterogeneous coefficients, presence of lagged dependent variables in a model with individual fixed effects, and time...