71st International Atlantic Economic Conference

March 16 - 19, 2011 | Athens, Greece

Distribution Dynamics of Russian Prices

Thursday, 17 March 2011: 14:54
Konstantin Gluschenko, D., Sc./Dr., habil. , Department of Economics, Novosibirsk State University, Novosibirsk, Russia
This paper aims to study the behavior of the entire cross-section distribution of prices in Russian regions over the decade of 2001–2010. The objective of the analysis is to reveal whether prices have tended to converge or diverge among Russian regions during the time span under consideration, and whether there have been transitions of regions between the groups of ‘expensive’ and ‘cheap’ ones.

The analysis uses non-parametric techniques, exploring price distribution dynamics. The cost of a staples basket across all Russian regions serves as a price representative.

Price dispersion measured as the standard deviation of prices proves to be more or less stable during the decade; the global crisis has not affected it. The shape of the annual cross-region distribution of prices is also similar across years. To characterize intra-distribution absolute price mobility of regions, a transition probability function (stochastic kernel) is estimated. It is also serves for deriving a long-run limit of the price distribution. The results suggest that neither price convergence nor divergence has occurred during 2001–2010. The Wodon-Itzchaki method is exploited to measure relative (rank) price mobility of regions.  Relative mobility is found to be very low and stable with seasonal deviations from a more or less constant level. Thus, ‘expensive’ and ‘cheap’ regions generally remain such.

Thus, there were no sizeable changes in goods market integration in Russia during the second decade of the 2000s. It was fairly stable; the global crisis did not affect this pattern.