Micro Price Dynamics During Japan's Lost Decades

29 Pages Posted: 9 Sep 2013

See all articles by Nao Sudou

Nao Sudou

Bank of Japan

Kozo Ueda

Waseda University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Kota Watanabe

Chuo University

Date Written: September 5, 2013

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 U.S. scanner data. Second, regular prices are almost as flexible as those in the U.S. 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.

Keywords: lost decade, deflation, temporary sales, regular prices, scanner data, price stickiness

JEL Classification: E3, E31, E5

Suggested Citation

Sudou, Nao and Ueda, Kozo and Watanabe, Kota, Micro Price Dynamics During Japan's Lost Decades (September 5, 2013). CAMA Working Paper Series 63/2013, Available at SSRN: https://ssrn.com/abstract=2322552 or http://dx.doi.org/10.2139/ssrn.2322552

Nao Sudou

Bank of Japan ( email )

CPO Box 203
Tokyo, 100-91
Japan

Kozo Ueda (Contact Author)

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Kota Watanabe

Chuo University ( email )

2nd floor Blg 4 Tampa Campus
742-1 Higashinakano, Hachioji
Tokyo 192-03
Japan

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