Analysis of the inflation structure of Spanish regions:The Ball and Mankiw methodology

Abstract

In this paper we analyze the incidence of the distribution of price changes on the inflation rate of Spanish regions (1994-2001).Especially,we pay attention to the role of variability and skewness.The methodology applied is based on the menu cost models developed by Ball and Mankiw.In general,we conclude that the behaviour of the regions is very homogeneous with respect to the «structure » of inflation.The significance of variability and skewness also shows the vulnerability of inflation to relative price shocks.

Keywords

• Inflation
• distribution of price changes
• variability
• skewness
• kurtosis