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Relative Price Variability and Inflation: Evidence from US Cities

  • Guy Debelle
  • Owen Lamont

We test whether the time-series positive correlation of inflation and intermarket relative price variability is also present in a cross-section of US cities. We find this correlation to be a robust empirical regularity: cities which have higher than average inflation also have higher than average relative price dispersion, ceteris paribus. This result holds for different periods of time, different classes of goods, and across different time horizons. Our results suggest that at least part of the relationship between inflation and relative price variability cannot be explained by monetary factors.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5627.

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Date of creation: Jun 1996
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Publication status: published as Journal of Political Economy Feb.1997, Vol. 105, No. 1, pp. 132-152
Handle: RePEc:nbr:nberwo:5627
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