Relative price variability and inflation in an equilibrium price misperceptions' model
Clare, A.D. and Thomas, S.H. (1993) Relative price variability and inflation in an equilibrium price misperceptions' model. Economics Letters, 42, (1), 51-57. (doi:10.1016/0165-1765(93)90172-9).
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In this paper we investigate the relationship between relative price variability and inflation in the United Kingdom using the equilibrium price misperceptions' model of Lucas (American Economic Review, 1973, 63, 526–534). We obtain a data consistent version of the equilibrium price misperceptions' model linking relative price variability, inflation and a small set of key macroeconomic variables. We find a significant, positive role for inflation in explaining relative price variability and suggest that this may be due to a positive relation between the variance of sector-specific shocks and inflation.
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||University Structure - Pre August 2011 > School of Management
|Date Deposited:||28 Feb 2007|
|Last Modified:||27 Mar 2014 18:23|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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