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Cross-Country Relative Price Volatility: Effects of Market Structure

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  • Yin-wong Cheung

    (University of California Santa Cruz)

  • Eiji Fujii

    (University of Tsukuba)

Abstract

Using annual data on nine manufacturing sectors of eighteen 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 crosscountry relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications.

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Bibliographic Info

Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 192005.

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Length: 40 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:hkm:wpaper:192005

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Keywords: Relative price volatility; market structure; price-cost margin; variance decomposition;

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Cited by:
  1. Dirk Niepelt & Martin Gonzalez-Eiras, 2007. "Sustaining Social Security," 2007 Meeting Papers 95, Society for Economic Dynamics.
  2. Gerald Eisenkopf & Pascal Sulser, 2013. "A Randomized Controlled Trial of Teaching Methods: Do Classroom Experiments Improve Economic Education in High Schools?," Working Paper Series of the Department of Economics, University of Konstanz 2013-17, Department of Economics, University of Konstanz.
  3. 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.
  4. Kemp-Benedict, Eric, 2012. "Material needs and aggregate demand," MPRA Paper 39960, University Library of Munich, Germany.
  5. Tsuruta, Yoshitaka, 2008. "What affects intranational price dispersion?: The case of Japanese gasoline prices," Japan and the World Economy, Elsevier, vol. 20(4), pages 563-584, December.

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