 Inflation and relative price variability: a revisitEric Chang and Joseph Cheng Applied Economics Letters, 2002, vol. 9, issue 5, 325-330 Abstract: Bomberger and Makinen reported in 1993 that the significant positive relationship between relative price variability and the rate of inflation, documented by Parks in 1978 and by others, disappears when the oil-shock years 1974 and 1980 are excluded from the sample. Using a sample of yearly and monthly observations of both a 12- category group and a 202-category group of personal consumption expenditures, evidence is found that Bomberger and Makinen's finding is sensitive to the level of commodity aggregation and to sampling intervals. Specifically, Parks' results are reinstated when the supply shock years of 1974, 1980 and 1990 are eliminated from the annual and monthly samples. Allowing for asymmetrical responses of relative price variability to positive and negative inflation further strengthens the relation between relative price and inflation. The overall evidence renders strong support for the classic findings by Parks and is consistent with the hypothesis of downward price rigidity of some sectors in the economy. Date: 2002 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:9:y:2002:i:5:p:325-330 Ordering information: This journal article can be ordered from DOI: 10.1080/13504850110067441 Access Statistics for this article Applied Economics Letters is currently edited by Anita Phillips More articles in Applied Economics Letters from Taylor & Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.