Bağlan, DenizYazgan, EgeYılmazkuday, Hakan2021-06-162021-06-162016-06https://hdl.handle.net/11411/3797https://doi.org/10.1016/j.jmacro.2016.04.004This paper investigates the relationship between relative price variability (RPV) and inflation using monthly micro-price data for 128 goods in 13 Turkish regions/cities for the period 1994–2010. The unique feature of this data set is the inclusion of annual inflation rates ranging between 0% and 90%. Semi-parametric estimations show that there is a hump-shaped relationship between RPV and inflation, where the maximum RPV is achieved when annual inflation is approximately 20%. It is shown that this result is consistent with a region- or city-level homogenous menu cost model that features Calvo pricing with an endogenous contract structure and non-zero steady-state inflation.eninfo:eu-repo/semantics/openAccessRelative price variabilityInflationCalvo pricingMenu costsArticle2-s2.0-8496732767510.1016/j.jmacro.2016.04.004N/AWOS:000393846500018