Inflation and relative price variability: a revisit
Bomberger and Makinen reported in 1993 that the significant positive relationship between relative price variability and the rate of inflation, documented by Parks in 1978 and by others, disappears when the oil-shock years 1974 and 1980 are excluded from the sample. Using a sample of yearly and monthly observations of both a 12- category group and a 202-category group of personal consumption expenditures, evidence is found that Bomberger and Makinen's finding is sensitive to the level of commodity aggregation and to sampling intervals. Specifically, Parks' results are reinstated when the supply shock years of 1974, 1980 and 1990 are eliminated from the annual and monthly samples. Allowing for asymmetrical responses of relative price variability to positive and negative inflation further strengthens the relation between relative price and inflation. The overall evidence renders strong support for the classic findings by Parks and is consistent with the hypothesis of downward price rigidity of some sectors in the economy.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 9 (2002)
Issue (Month): 5 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEL20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEL20|
When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:9:y:2002:i:5:p:325-330. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.