Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5067083 | European Economic Review | 2012 | 11 Pages |
Abstract
Monetary search theory implies 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 results in an optimal inflation rate above zero. For highly integrated markets with low search costs, however, the impact of inflation on price dispersion should only be small. Using price data of the European Union member states, this paper tests and confirms these predictions of monetary search theory.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Sascha S. Becker, Dieter Nautz,