A PRELIMINARY INVESTIGATION OF PRICE DISPERSION IN ISTANBUL

Alpay FİLİZTEKİN (Sabancı University)

Nobody likes inflation. However, there is very little research on the real costs of inflation. One important aspect of persistent high inflation is that it affects the distribution of relative prices. This paper investigates how dispersed prices are in Istanbul using a very detailed data set on store-level monthly prices of many goods between 1992-2000. The paper focuses on the relationship between duration of price quotations and inflation and on the mobility of intra-distribution mobility. Thus it also provides some evidence about the existence (or lack) and magnitude of menu costs and search costs.