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Freely Determined versus Regulated Prices: Implications for the Measured Link between Money and Inflation

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  • Dexter, Albert S
  • Levi, Maurice D
  • Nault, Barrie R

Abstract

By constructing component indices for Canadian prices that are judged by a panel of experts to be either freely-determined or regulated, the authors are able to show that regulated prices respond less systematically and less quickly to changes in the money supply. They also show that idiosyncrasies in the relationship between money and the different component indices are offsetting. The authors' results suggest that sticky prices, which are an underpinning of new-Keynesian economics, may well be due to the inclusion of regulated prices in overall indices of inflation. Copyright 1993 by Ohio State University Press.

Suggested Citation

  • Dexter, Albert S & Levi, Maurice D & Nault, Barrie R, 1993. "Freely Determined versus Regulated Prices: Implications for the Measured Link between Money and Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 222-230, May.
    • Handle: RePEc:mcb:jmoncb:v:25:y:1993:i:2:p:222-30
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    Citations

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    Cited by:

    1. M. Bagella & L. Becchetti, 1999. "The Determinants of Motion Picture Box Office Performance: Evidence from Movies Produced in Italy," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 23(4), pages 237-256, November.
    2. Dexter, Albert S. & Levi, Maurice D. & Nault, Barrie R., 2002. "Sticky prices: the impact of regulation," Journal of Monetary Economics, Elsevier, vol. 49(4), pages 797-821, May.
    3. Devadoss, Stephen, 1994. "Price Inertia: Money Supply And Price Changes," A.E. Research Series 305123, University of Idaho, Department of Agricultural Economics and Rural Sociology.
    4. Radoslav Krastev, 1998. "Free Trade Versus Protectionism. Promoting Competition in Bulgaria as an Anti-Inflationary Factor," Working paper series 11998en, Agency for Economic Analysis and Forecasting.
    5. Devadoss, Stephen, 1994. "Freely Determined Versus Regulated Prices And The Policy Ineffectiveness Proposition," A.E. Research Series 305126, University of Idaho, Department of Agricultural Economics and Rural Sociology.
    6. Ahmed, S. Ejaz & Nicol, Christopher J., 2012. "An application of shrinkage estimation to the nonlinear regression model," Computational Statistics & Data Analysis, Elsevier, vol. 56(11), pages 3309-3321.

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