NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Relative Price Variability and Inflation: Evidence from US Cities

Guy Debelle, Owen Lamont

NBER Working Paper No. 5627
Issued in June 1996
NBER Program(s):   ME

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.

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Document Object Identifier (DOI): 10.3386/w5627

Published: Journal of Political Economy Feb.1997, Vol. 105, No. 1, pp. 132-152 citation courtesy of

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