Relative Price Variability and Inflation: Evidence from Us Cities

33 Pages Posted: 19 Aug 1996 Last revised: 19 May 2021

See all articles by Guy Debelle

Guy Debelle

Reserve Bank of Australia

Owen A. Lamont

Harvard University - Department of Economics

Date Written: June 1996

Abstract

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 monetary factors.

Suggested Citation

Debelle, Guy and Lamont, Owen A., Relative Price Variability and Inflation: Evidence from Us Cities (June 1996). NBER Working Paper No. w5627, Available at SSRN: https://ssrn.com/abstract=3244

Guy Debelle

Reserve Bank of Australia ( email )

65, Martin Place
Sydney, NSW 2000
Australia

Owen A. Lamont (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

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