Mind the gap: city-level inflation synchronization
ENThe post-pandemic rise in consumer prices across the world has renewed interest in infation dynamics after decades of global disinfation. This paper provides a spatial investigation of infation synchronicity at the city level in Lithuania using disaggregated monthly data during the period 2000–2021. The empirical analysis provides strong evidence that (i) the co-movement of city-level infation rates—estimated using the instantaneous quasi-correlation approach—is signifcantly weaker than the extent of synchronization suggested by the simple correlation analysis; (ii) there is substantial heterogeneity in the instantaneous quasi-correlation of infation subcomponents between city pairs; and (iii) there are signifcant changes in the degree of city-level synchronization over time, refecting important economic developments in history such as the global fnancial crisis, the adoption of euro, and the COVID-19 pandemic. Keywords: infation synchronization, subnational, transition economies, Lithuania.
