Deflation and relative prices : evidence from Japan and Hong Kong
- We test the menu cost model of Ball and Mankiw (1994, 1995), which implies that the impact of price dispersion on inflation should differ between inflation and deflation episodes, using data for Japan and Hong Kong. We use a random cross-section sample split when calculating the moments of the distribution of price changes to mitigate the small-cross-sectionsample bias noted by Cecchetti and Bryan (1999). The parameter on the third moment is positive and significant in both countries during both the inflation and deflation periods, and the parameter on the second moment changes sign in the deflation period, as the theory predicts. Keywords: inflation, deflation, menu costs, Hong Kong, Japan JEL Numbers: E31
Download full text files
Additional Services
| Author: | Stefan Gerlach, Peter Kugler |
|---|---|
| URN: | urn:nbn:de:hebis:30-70422 |
| URL: | http://www.imfs-frankfurt.de/fileadmin/user_upload/pdf/Working%20Paper_2007_12_Gerlach_Kugler.pdf |
| Parent Title (German): | Working paper series / Institute for Monetary and Financial Stability ; 12 |
| Series (Serial Number): | Working paper series / Institute for Monetary and Financial Stability (12) |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2007 |
| Year of first Publication: | 2007 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2009/09/17 |
| Tag: | Hong Kong; Japan; deflation; inflation; menu costs |
| Note: | Published in: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: Money, Macro and Finance in East Asia A2-V3 |
| HeBIS-PPN: | 218584806 |
| Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Institute for Monetary and Financial Stability (IMFS) |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
