Relative Price Variability and Inflation in Europe

22 Pages Posted: 12 Oct 2003

See all articles by David Fielding

David Fielding

University of Leicester - Department of Economics

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

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Abstract

The relationship between inflation and the relative variability of prices has been the subject of careful investigation in the United States using data for product groups at the city level. Yet in Europe, where the relationship could have profound effects on the viability of monetary integration, no attempt has been made to study the relationship. This paper fills the gap by examining data disaggregated to the commodity level across 10 EU countries. Evidence is found for logistic smooth transitions in the relative price variability measures within countries and within product groups. When this deterministic component isremoved, the stochastic element is not persistent and does not always have the positive relationship with inflation commonly found in US city data.

Suggested Citation

Fielding, David and Mizen, Paul, Relative Price Variability and Inflation in Europe. Available at SSRN: https://ssrn.com/abstract=439193

David Fielding (Contact Author)

University of Leicester - Department of Economics ( email )

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Paul Mizen

University of Nottingham ( email )

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Bank of England

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

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