Inflation and relative price variability: Reinstating Parks' results

This paper revisits Parks' seminal work on the time series relationship between inflation and relative price variability. The results reported show that a significant positive association is obtained allowing for an asymmetrical response of relative prices to episodes of positive and negative inflation. This finding is :maintained after excluding oil shock years, extending Parks' original sample to 1996, using an alternative data set and allowing for a higher degree of disaggregation.