Inflation and Relative Price Variability in a Low Inflation Country: Empirical Evidence for Germany

Dieter Nautz and Juliane Scharff

German Economic Review, 2005, vol. 6, issue 4, 507-523

Abstract: Abstract. The recent literature on the welfare cost of inflation emphasizes inflation's effect on the variability of relative prices. Expected and unexpected inflation have both been proposed to increase relative price variability (RPV) and, thereby, to distort the information content of nominal prices. This paper presents new evidence on the impact of inflation on RPV in Germany. Our results indicate that the influence of expected inflation disappears if a credible monetary policy stabilizes inflationary expectations on a low level. Yet the significant impact of unexpected inflation suggests that even low inflation rates can lead to welfare losses by raising RPV above its efficient level.

Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://doi.org/10.1111/j.1468-0475.2005.00144.x

Related works:
Journal Article: Inflation and Relative Price Variability in a Low Inflation Country: Empirical Evidence for Germany (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:germec:v:6:y:2005:i:4:p:507-523

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1465-6485

Access Statistics for this article

German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

More articles in German Economic Review from Verein für Socialpolitik Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().