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Cross-Country Relative Price Volatility: Effects of Market Structure

Yin-Wong Cheung and Eiji Fujii ()

No 1456, CESifo Working Paper Series from CESifo Group Munich

Abstract: Using annual data on nine manufacturing sectors of eighteen OECD countries, the article studies the implications of market structure for cross-country relative price variability. It is found that, in accordance with predictions from a standard markup pricing model, reductions in market competition, along with increased nominal exchange rate volatility, are associated with greater variability of cross-country relative prices. The market structure also has similar effects on components of cross-country relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications.

Keywords: relative price volatility; market structure; price-cost margin; variance decomposition (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ifn
Date: 2005
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Journal Article: Cross‐country Relative Price Volatility: Effects of Market Structure* (2006) Downloads
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