Relative Prices and Inflation: New Evidence from Different Inflationary Contexts
AbstractThis paper analyzes the relationship between inflation and relative price variability, in the direction of the latter, in two countries with very different inflationary experiences: Argentina and Spain. To address this objective, using disaggregated price indexes (Wholesale Price Index for Argentina and Consumer Price Index for Spain), we delimitate different inflationary regimes and compute a set of regressions for each country. Our results suggest evidence in favor of the non-neutrality of inflation (mostly in hyperinflation periods) and do not support neither the menu costs nor the signal extraction approaches. We also detect significant structural changes in the relationship depending on the inflationary regime.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/71.
Length: 26 pages
Date of creation: 2004
Date of revision:
inflation; relative price variability; inflation regimes; inflation volatility; expected and unexpected inflation.;
Other versions of this item:
- M. Angeles Caraballo & Carlos Dabus & Carlos Usabiaga, 2006. "Relative prices and inflation: new evidence from different inflationary contexts," Applied Economics, Taylor & Francis Journals, vol. 38(16), pages 1931-1944.
- Carlos Usabiaga. & MarÃa Ãngeles Caraballo & Carlos DabÃºs, 2004. "Relative Prices and Inflation: New Evidence from Different Inflationary Contexts," Econometric Society 2004 Latin American Meetings 338, Econometric Society.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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