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| Author: | Fielding, D. Mizen, P. |
| Title: | Evidence on the functional relationship between relative price variability and inflation with implications for monetary policy |
| Journal: | Economica
2008 : NOV, VOL. 75:300, p. 683-699 |
| Index terms: | monetary policy consumer expenditure inflation prices models USA |
| Language: | eng |
| Abstract: | Using quarterly personal consumer expenditure data in the U.S. from 1967(I) to 2003(I), this paper deals with the functional relationship btw. relative price variability (RPV) and inflation, deriving some implications for monetary policy. In order to explore the shape of the RPV function, non-parametric regression techniques are used. The empirical RPV function produces a plausible 'optimal' value of inflation in the region of five percentage points, being consistent with the theory and being within the range of values cited by recent evaluations of 'grease' and 'sand' effects. |
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