Working Paper

Micro price dynamics during Japan's lost decades

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.

JEL Classification: E3; E31; E5;

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Globalization Institute Working Papers

Publication Date: 2013

Number: 159

Note: Published as: Sudo, Nao, Kozo Ueda and Kota Watanabe (2014), "Micro Price Dynamics During Japan's Lost Decades," Asian Economic Policy Review 9 (1): 44-64.