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Cross‐country Relative Price Volatility: Effects of Market Structure *
Author(s) -
Cheung YinWong,
Fujii Eiji
Publication year - 2006
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2006.00617.x
Subject(s) - economics , volatility (finance) , econometrics , relative price , monetary economics , exchange rate , market structure , markup language , financial economics , microeconomics , computer science , xml , operating system
Using annual data on nine manufacturing sectors of 18 OECD countries, the article studies the implications of market structure for cross‐country relative price variability. It is found that, in accordance with predictions from a standard markup pricing model, reductions in market competition, along with increased nominal exchange rate volatility, are associated with greater variability of cross‐country relative prices. The market structure also has similar effects on components of cross‐country relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications.