Micro Price Dynamics during Japan's Lost Decades

Nao Sudo, Kozo Ueda, Kota Watanabe

    Research output: Contribution to journalArticle

    8 Citations (Scopus)

    Abstract

    We study micro price dynamics and their macroeconomic implications using daily scanner data from 1988 to 2013. We provide five facts. First, posted prices in Japan are ten times as flexible as those in the US scanner data. Second, regular prices are almost as flexible as those in the USA and Euro area. Third, the heterogeneity of frequency and size of price change across products is sizable and maintained throughout the sample period. Fourth, during Japan's lost decades, temporary sales have played an increasingly important role in households' consumption expenditure. Fifth, the frequency of upward regular price revisions and the frequency of sales are significantly correlated with the macroeconomic environment, in particular indicators associated with a labor market, while other components of price changes are not.

    Original languageEnglish
    Pages (from-to)44-64
    Number of pages21
    JournalAsian Economic Policy Review
    Volume9
    Issue number1
    DOIs
    Publication statusPublished - 2014 Jan

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    Keywords

    • Deflation
    • Lost decade
    • Price stickiness
    • Regular price
    • Scanner data
    • Temporary sale

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)
    • Management, Monitoring, Policy and Law
    • Political Science and International Relations

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