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Nominal Rigidities and Retail Price Dispersion in Canada over the Twentieth Century

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  • Ross D. Hickey
  • David S. Jacks

Abstract

We introduce a new data set on over 230,000 monthly prices for 10 goods in 50 Canadian cities over the 40 year period from 1910 to 1950. This coupled with previously published price information from the late twentieth century allows us to present one of the first comprehensive views of nominal rigidities and retail price dispersion over the past 100 years. We find that nominal rigidities have been conditioned upon prevailing rates of inflation with a greater frequency of price changes occurring in the 1920s and the 1970s. Additionally, the process of retail market integration has surprisingly followed a U-shaped trajectory, with many domestic markets being better integrated--as measured by the average dispersion of retail prices--at mid-century than in the 1990s. We also consider the linkages between nominal rigidities and price dispersion, finding results consistent with present-day data.

Suggested Citation

  • Ross D. Hickey & David S. Jacks, 2010. "Nominal Rigidities and Retail Price Dispersion in Canada over the Twentieth Century," NBER Working Papers 16098, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16098
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    Cited by:

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    2. Bruce Cater & Byron Lew, 2018. "The impact of climate on the law of one price: A test using North American food prices from the 1920s," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1191-1220, November.
    3. Crucini, Mario J. & Shintani, Mototsugu & Tsuruga, Takayuki, 2015. "Noisy information, distance and law of one price dynamics across US cities," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 52-66.
    4. James MacGee & Chris Hajzler, 2012. "Retail Price Differences across U.S. and Canadian Cities during the Interwar Period," 2012 Meeting Papers 1126, Society for Economic Dynamics.
    5. Mario J. Crucini & Mototsugu Shintani & Takayuki Tsuruga, 2020. "A Behavioral Explanation for the Puzzling Persistence of the Aggregate Real Exchange Rate," NBER Working Papers 27420, National Bureau of Economic Research, Inc.
    6. Visockytė Ligita, 2018. "Price Rigidity in Norway in the Nineteenth Century," Ekonomika (Economics), Sciendo, vol. 97(1), pages 32-46, January.
    7. David Fielding & Christopher Hajzler & James (Jim) C. MacGee, 2017. "Price-Level Dispersion versus Inflation-Rate Dispersion: Evidence from Three Countries," Staff Working Papers 17-3, Bank of Canada.
    8. Bocionek, Milena & Anders, Sven M., 2012. "Estimating Price Rigidity in Vertically Differentiated Food Product Categories with Private Labels," Staff Paper Series 139931, University of Alberta, Department of Resource Economics and Environmental Sociology.
    9. David Fielding & Christopher Hajzler & James Macgee, 2015. "Distance, Language, Religion, and the Law of One Price: Evidence from Canada and Nigeria," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(5), pages 1007-1029, August.
    10. Luca Macedoni, 2021. "Has the Euro Shrunk the Band? Relative Purchasing Power Parity Convergence in a Currency Union," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(2), pages 593-620, April.
    11. Boffa,Mauro & Varela,Gonzalo J., 2019. "Integration and Price Transmission in Key Food Commodity Markets in India," Policy Research Working Paper Series 8755, The World Bank.

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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-

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