Volatility of relative prices and transportation costs: evidence for Brazilian cities

ABSTRACT

This work estimates the effect of transport costs on relative price volatility in Brazilian cities. We use time-varying volatility measures and propose a new proxy for transportation costs. The results of the dynamic panel data models show (little) evidence of a positive impact of transport costs on relative price volatility, only in specifications without the relative wage volatility.

KEYWORDS:

• Transport Costs
• relative Prices
• Brazilian cities
• panel Data

JEL CLASSIFICATION:

• C23
• E31
• F15

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The existence of non-tradables, tariff and non-tariff barriers, heterogeneity of baskets of goods compared, money market and credit shocks, among others, also hinder this convergence process.

² The relative wages are included as covariate in the model because it reflects the differences of cost structures, resulting in differences in the final price of the good, like pointed by Engel and Rogers (1996).

Additional information

Funding

This work was supported by the Conselho Nacional de Desenvolvimento Científico e Tecnológico.