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@article{ Pfaffermayr2009, title = {The Law of One Price: Conditional Convergence Evidence from Disaggregated Data}, author = {Pfaffermayr, Michael}, journal = {Applied Economics}, number = {26}, pages = {3345-3357}, volume = {41}, year = {2009}, doi = {https://doi.org/10.1080/00036840701426584}, urn = {https://nbn-resolving.org/urn:nbn:de:0168-ssoar-240761}, abstract = {This paper contributes to the literature on the Law of One Price (LOP) and absolute Purchasing Power Parity (PPP) in two ways. First, it uses a novel set of PPP data from the International Comparison Programme for OECD countries and 195 internationally comparable products from 1980 to 1996. Second, it derives and applies a test of conditional sigma-convergence, which does not require long time spans or high frequency data. Between 1990 and 1996 for 10 out of 23 countries a significant reduction in the variance of the deviations from LOP is found for tradeables, but none in case of non-tradeables. For the former, the deviations from LOP close out at half-lives between 2.2 and 6.3 years. However, there are also persistent country-specific deviations from LOP parities.}, }