deviations from the law of one price (LOP) are rising in the distance between US cities. A standard, two-city, stochastic … equilibrium model with trade costs can predict the relationship between volatility and distance but not between persistence and … distance. To account for the latter fact, we augment the standard model with noisy signals about the state of nominal aggregate …

from the law of one price (LOP) are positively correlated with the distance between cities. A standard, two … and distance but not between the persistence and distance. To account for the latter fact, we augment the standard model …

from the law of one price (LOP) are positively correlated with the distance between cities. A standard, two … and distance but not between the persistence and distance. To account for the latter fact, we augment the standard model …