Money and price dispersion in the united states

Zvi Hercowitz*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

Abstract

This paper reports an empirical test of a price dispersion equation using data on the U.S. after World War II. The equation - derived elsewhere from a version of the partial informationlocalized market models - relates price dispersion to the magnitude of the aggregate shocks. In order to test the model a price dispersion series is computed using annual wholesale price indexes and weights for the period 1948/76. The data on money shocks are the unanticipated money growth series estimated by Barro. The tests also include a measure of aggregate-real disturbances. From the theoretical point of view the results are negative. They do not detect an effect of money shocks on price dispersion, but support the predicted effect of real shocks.

Original languageEnglish
Pages (from-to)25-37
Number of pages13
JournalJournal of Monetary Economics
Volume10
Issue number1
DOIs
StatePublished - Jul 1982

Funding

FundersFunder number
National Science Foundation

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