The paper is organized as follows: Section 2 discusses briefly two main groups of theories that link inflation and relative price variability and provides a sketch of a survey of the literature. Section 3 takes on Ball and Mankiw's models predicting the causality from relative price variability...

In Poland between 1989 and 1997, growth in money and wages fueled inflation and appreciation of the real exchange rate lowered it. Large administered price increases associated with adjustment-in utilities and other sectors controlled by the government-produced substantial upward inflationary...