The effects of general inflation and idiosyncratic cost shocks on within-commodity price dispersion: evidence from microdata

Article Abstract:

The dispersion of price levels within highly disaggregated markets has been studied by analyzing plant-level product records from the US Census of Manufacturers. The impact of inflation on price dispersion is investigated by examining the cross-sectional variation in the drift rate of average input costs within a market. Results indicate price dispersion becomes bigger when the drift rate of the desired price for a certain commodity becomes higher. This indicates that the relation between inflation and price dispersion extends to a wider range of food commodities.

Food & Kindred Products, Food Manufacturing, FOOD AND KINDRED PRODUCTS, Prices and rates, Food industry

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Cross-sectional inflation asymmetries and core inflation: a comment on Bryan and Cecchetti

Article Abstract:

Significant positive correlation exists between core inflation and inflation asymmetry at the monthly frequency. This observation proves that Bryan and Cecchetti's argument that the skewness is due to a small-sample bias is wrong. An application of the median and the triples U-statistic to the monthly CPI data show a positive and significant relationship between the cross-sectional inflation asymmetry and core inflation. Monte Carlo analysis also revealed no spurious results would be produced with these measures.

Inflation Accounting

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