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Article: Relative price changes as supply shocks: evidence from U.S. cities.
- Article from:
- Quarterly Journal of Business and Economics
- Article date:
- June 22, 2002
- Author:
CopyrightCOPYRIGHT 2002 University of Nebraska-Lincoln. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Introduction
There is a substantial literature that explores the relationship between inflation and the distribution of relative price changes. It is widely documented that there is a positive relationship between inflation and the dispersion of relative price changes. Although somewhat less appreciated, inflation and the skewness of relative price changes also are found to be positively correlated. The theoretical exposition has not been conclusive in regards to the causal mechanism that generates the observed relationships. Theories that have been proposed to explain these relationships fall into one of three categories. The first category of theory shows that ...