Relative Price Variability and Inflation: A Disaggregated Analysis
Relative price variability has been studied at the cross-sectional (intermarket) level. This paper addresses the equally important phenomenon of intramarket variability: the dispersion of commodity price movements around the industry average. Using quarterly price data for eighty disaggregated commodity groups in the United Kingdom from 1974 to 1984, the paper investigates the determinants of intramarket price variability and replicates some previous cross-sectional tests for the United Kingdom. Intramarket price variability is found to be positively related to inflation. Intramarket variability is found to be positively related to the average (market) rate of price change. Copyright 1987 by University of Chicago Press.
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