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PPPs for policy making: a visual guide to using data from the ICP - Chapter 3: Trade and competitiveness

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Market convergence

The Statistical Office of the European Union (Eurostat) uses PPP-based PLIs to measure price level convergence within the European Union and Euro area. Convergence is assessed by the coefficient of variation for PLIs for each group of countries, where the EU average PLI is set equal to 100. Both inflation convergence, as defined in the accession criteria to the eurozone, and price level convergence can be used to measure progress in improving effective competition in the distributive trades sector and to guide policy initiatives to reduce border effects, narrow price differentials, strengthen the Single Market and enhance the effectiveness of monetary policy (figure 3.1).