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Title:Inflation, price dispersion and market integration through the lens of a monetary search model PDF Logo
Authors:Becker, Sascha
Nautz, Dieter
Issue Date:2010
Series/Report no.:School of Business & Economics Discussion Paper 2010/2
Abstract:Recent monetary search models emphasize that the real effects of inflation via its impact on price dispersion depend on the level of search costs and, thus, on the level of market integration. For less integrated markets, the inflation-price dispersion nexus is predicted to be asymmetrically V-shaped which implies an optimal inflation rate above zero. For highly integrated markets, however, theory suggests that the impact of inflation on price dispersion disappears. Employing price data of the European Union member states, this paper is the first that empirically tests these implications of monetary search theory.
Subjects:Inflation
Relative price variability
Monetary search models
European market integration
JEL:E31
C23
ISBN:978-3-941240-14-8
Document Type:Working Paper
Appears in Collections:Diskussionsbeiträge, FB Wirtschaftswissenschaft, FU Berlin

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