Relative Price Variability and Inflation: Evidence from US Cities
Working Paper 5627
DOI 10.3386/w5627
Issue Date
We test whether the time-series positive correlation of inflation and intermarket relative price variability is also present in a cross-section of US cities. We find this correlation to be a robust empirical regularity: cities which have higher than average inflation also have higher than average relative price dispersion, ceteris paribus. This result holds for different periods of time, different classes of goods, and across different time horizons. Our results suggest that at least part of the relationship between inflation and relative price variability cannot be explained by monetary factors.
Published Versions
Journal of Political Economy Feb.1997, Vol. 105, No. 1, pp. 132-152 citation courtesy of