Inflation and the Informativeness of Prices: Microeconomic Evidence from High Inflation

Mariano Tommasi

Brazilian Review of Econometrics, 1996, vol. 16, issue 2

Abstract: I study the effect of inflation on the ability of economic agents to forecast real prices, using microeconomic data from Argentina 1990-1992. The evidence favors the view that inflation degrades the informational content of real prices. Several rules for forecasting real prices are shown to perform worst at higher iuflation. Also, at high inflation, real prices have shorter durations, and mark-down sales disappear. This snggests that inflation (at least high inflation) has "Industrial Organization" effects usually ignored in macroeconomic assessments of the effects of inflation.

Date: 1996
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Working Paper: Inflation and the Informativeness of Prices Microeconomic Evidence from High Inflation (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:sbe:breart:v:16:y:1996:i:2:a:2875

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