Work detail

Regional disparities in price levels across the European Union

Author: Bc. Dominika Kolcunová
Year: 2015 - summer
Leaders: doc. Petr Janský Ph.D.
Consultants:
Work type: Bachelors
Language: English
Pages: 90
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/151405/
Abstract: Undisputedly, including price levels should be an integral part of any regional analysis.
Currently, at the country level, purchasing power parities (or, in the case of the European
Union, purchasing power standards) are used. However, these measures account only for one
national parity in each country and do not reflect inter-regional price differentials.
Consequently, this approach distorts the information value of the indicators (regional GDP per
capita, disposable income per capita, et cetera) since the majority of countries are definitely
not homogenous from the perspective of prices. Therefore, the aim of this thesis is to estimate
regional price levels across the EU regions using an econometric model, which is based on
available data on regional price levels for six countries in Europe. After estimating a
regression equation and checking for the predictive power, regional price levels for the rest of
EU regions at NUTS 2 level are estimated for the first time. Subsequently, they are used for
recalculation of socio-economic indicators. The results imply that significant differences
between analyses with one national price level and actual regional levels exist. This raises
also several issues for policy implications (for instance potential sub-optimality of the
European Cohesion policy, which is analysed as well) and shows the necessity and
importance of precise estimation of regional price disparities. A part of the thesis also
comprises the graphical visualisation of the estimated price levels in the form of two maps.

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