Understanding long-run price dispersion

Mario Crucini (mcrucini@purdue.edu) and Hakan Yilmazkuday

Journal of Monetary Economics, 2014, vol. 66, issue C, 226-240

Abstract: A unique panel of retail prices spanning 123 cities in 79 countries from 1990 to 2005 is used to uncover the novel properties of long-run international price dispersion. At the PPP level, almost all of price dispersion is attributed to unskilled wage dispersion. At the level of individual goods and services, the average contribution of these wages is significantly reduced, reflecting that good-specific sources of price dispersion, such as trade costs and good-specific markups, tend to average out across goods. At the LOP level, borders and distance contribute about equally to price dispersion that is rising in the distribution share.

Keywords: Real exchange rates; Purchasing power parity; Law of one price; Dynamic panel (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (38)

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Related works:
Working Paper: Understanding Long-run Price Dispersion (2014)
Working Paper: Understanding Long-run Price Dispersion (2013)
Working Paper: Understanding Long-run Price Dispersion (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:66:y:2014:i:c:p:226-240

DOI: 10.1016/j.jmoneco.2014.04.012

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