Are Prices Countercvclical?: Evidence from the G-7
28 Pages Posted: 15 Feb 2006
Date Written: August 1994
This paper re-examines the cyclical behavior of prices using postwar quarterly data for the G-7. We confirm recent evidence that the price level is countercyclical. However, we find strong evidence that the inflation rate is procyclical in our sample. Our results show the importance of making a clear distinction between inflation and the cyclical component of the price level when reporting and interpreting stylized facts regarding business cycles.
JEL Classification: E31, E32
Suggested Citation: Suggested Citation