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Relative Price Variability and Inflation: Evidence from U.S. Cities

Guy Debelle¹; Owen Lamont²

¹ Reserve Bank of Australia · ² Harvard University

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 moneta~factors.

DOI

10.1086/262068

Volume

105 (1)

Pages

132-152

Language

en

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BibTeX

Sources

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