We study a large dataset on Japanese consumer prices with two distinct features: low inflation rates and high frequency of price changes. Overall, the probability of price changes for traded goods tends to be strongly driven by information on past macroeconomic aggregates, rather than on previous price changes. The same conclusion, however, does not necessarily hold for non-traded goods. These results are consistent across different samples and under a variety of robustness checking schemes. A menu costs model is then augmented with capital accumulation and endogenous investment costs to account for these facts. The model performs reasonably well in terms of capturing these salient features of Japanese consumer prices and at the same time keeping up with macroeconomic data along some important dimensions.
Introduction
At the turn of the twenty-first century, Japanese price levels began to alternate between low inflation and deflation. This, however, was not Japan's only problem: it had also been suffering from prolonged stagnation since the 1990s, a problem so extreme that many often refer to this period as the `lost decade.' What is more startling is that, despite many deliberate actions from the Bank of Japan, these problems still persist. Until recently, Japan still holds onto a near zero interest rates policy, which sometimes referred to as an equivalent of the American quantitative easing. Two features of Japanese consumer prices stand out during this period. First, price changes are frequent. Second, price increases are of higher frequency but of lesser magnitude than price decreases, which dovetails nicely with the distinctively low inflation rates (see, e.g., Figure 1).
How does past information on monetary policy and r...
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...cas (2007) that is augmented with capital accumulation and endogenous investment costs to account for these facts. The model performs reasonably well in terms of capturing these salient features of Japanese consumer prices and at the same time keeping up with the macroeconomic aggregates along some important dimensions.
The paper proceeds as follows. Section 2 reviews some key features of the Japanese micro-prices data, along with some stylized facts on the frequency of price changes. Section 3 analyzes the behaviors of the hazard functions for micro-prices under both parametric and non-parametric set-ups. Given these features of the micro prices data, section 4 augments an otherwise standard state-dependent pricing model with capital accumulation and endogenous investment costs. Section 4.3 discusses the model results and possible extensions. Section 5 concludes.
Culture is a collection of religion, traditions, and beliefs that are passed down from generation to generation. Culture is created and maintained through the repetition of stories and behavior. It is never definite because it is continuously being modified to match current trends, however, historical principles are still relevant. With respect to mental illness, culture is crucial to how people choose to deal with society and the methods used to diagnose and cope with mental illnesses. In Watters’ The Mega-Marketing Depression of Japan, he focuses on how Japan and other cultures define depression, but also displays how the influence of American treatments in eastern countries eventually becomes the international standards. Even though the
The experiment that was performed consisted of prices being manipulated on a set of 72 grocery products over a six week period. The products were classified as stock-up goods or non stock-up goods.
European style cabinet system headed by a prime minister and a staff consistent of former samurai mostly, but shied from them in favor of a system of civil service examinations to qualify officials
Most American citizens remember December 7, 1941 and the significance that the incidents of that day had. The attack on Pearl Harbor was a shock to the United States of America and it engaged our country in the Second World War of that century (Pearl, 2009). Unfortunately, due to that incident, many Americans harbor many negative feelings and attitudes towards the country of Japan. While this is an understandable sentiment, it is unnecessary, because Japan is an influence on not on the United States but the entire world. Throughout this paper, we will look at the country of Japan as many have never viewed them before. Their actions of the past are just that, the past. Japan is a thriving and successful country within our environment and it is in our best interest to understand that country better. Japan, as a culture, is the
Moreover, the context in which this book was written demonstrates that Japan is going through the financial affluence as well as the greatest boom since it is during the postwar period, much of the financial affluence had been caused by the consumerism in Japan. The author seem to be biased on this theme, despite the benefits consumerism has had on Japan, Yoshimoto goes ahead to give it a negative
“Microeconomics and macroeconomics can be described in terms of small-scale vs. large-scale or in terms of partial vs. general equilibrium. Perhaps the most important distinction, however, is in terms of the role of equilibrium. While issues in microeconomics seldom challenge the notion of a naturally occurring equilibrium, the existence of business cycles and, especially, unemployment suggests too many observers that macroeconomics raises issues of a different character.” (McConnell & Brue, 2004).
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The inflation rate of Thailand was the lowest during 1998. From 1997 to 1998, to solve the Asian financi...
Export trends have been an important factor during Japan's present economic adjustment period, and the structures of Japanese exports, together with the imports, have been changing substantially in recent years. The changes in the country's export and import structures during the 1990s can be characterized by the following three key developments: (1) the weight of IT-related goods has been rising in both real exports and imports; (2) real imports of consumer goods from East Asia has been increasing; and (3) the US remains Japan's largest trading partner as a single country. Due to these factors, maintaining its comparative advantage became the priority in the current global economy.
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The Mundell-Fleming model is a macroeconomic model analyzing aggregate demand, developed independently by both Mundell (1963) and Fleming (1962). The most important feature of the Mundell-Fleming model is that it incorporates international capital movements into the IS-LM framework, which is essential considering the worldwide trend towards financial integration (Mundell, 1963, p. 475). The leading assumption is a small open economy with pe...
Rittenberg, L. and Tregarthen, T. (2012). Macroeconomics Principles V. 2.0. Licensed under Creative Commons by-nc-sa 3.0 (https://creativecommons.org/licenses/by-nc-sa/3.0/)
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Japan’s rising yen and the decline of the US dollar, East Asia Forum, 2011. Available at: