Yen or Yuan? The law of one price and economic integration in Asia

Abstract Using highly comparable local retail prices of 146 goods and services across 18 Asian countries over 1990–2014, we analyse price dispersion and test convergence to the law of one price ( LOP ) for these prices around three price benchmarks—Asia‐average, Japan and China prices—to gain insight about market integration in overall Asia as well relative integration of Asian economies to Japan and China. Cross‐Asia price dispersion around …