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Cross-country Relative Price Volatility: Effects of Market Structure

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  • Yin-Wong Cheung
  • Eiji Fujii

Abstract

Using annual data on nine manufacturing sectors of 18 OECD countries, the article studies the implications of market structure for cross-country relative price variability. It is found that, in accordance with predictions from a standard markup pricing model, reductions in market competition, along with increased nominal exchange rate volatility, are associated with greater variability of cross-country relative prices. The market structure also has similar effects on components of cross-country relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications. Copyright � 2006 The Authors; Journal compilation � 2006 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 14 (2006)
Issue (Month): 5 (November)
Pages: 836-848

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Handle: RePEc:bla:reviec:v:14:y:2006:i:5:p:836-848

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Citations

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Cited by:
  1. Martin Gonzalez-Eiras & Dirk Niepelt, 2004. "Sustaining Social Security," 2004 Meeting Papers, Society for Economic Dynamics 199, Society for Economic Dynamics.
  2. Kemp-Benedict, Eric, 2012. "Material needs and aggregate demand," MPRA Paper 39960, University Library of Munich, Germany.
  3. Tsuruta, Yoshitaka, 2008. "What affects intranational price dispersion?: The case of Japanese gasoline prices," Japan and the World Economy, Elsevier, Elsevier, vol. 20(4), pages 563-584, December.
  4. Gerald Eisenkopf & Pascal Sulser, 2013. "A Randomized Controlled Trial of Teaching Methods: Do Classroom Experiments improve Economic Education in High Schools?," TWI Research Paper Series, Thurgauer Wirtschaftsinstitut, Universität Konstanz 80, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  5. Yin-Wong Cheung & Kon S. Lai, 2006. "A Reappraisal of the Border Effect on Relative Price Volatility," CESifo Working Paper Series 1640, CESifo Group Munich.

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