Micro Price Dynamics during Japan's Lost Decades

Nao Sudo, Kozo Ueda, Kota Watanabe

Research output: Contribution to journalReview articlepeer-review

9 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 1

Keywords

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

ASJC Scopus subject areas

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

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