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Price Dynamics In Japan (1981-2001): A Structural Analysis Of Mechanisms In The Goods And Labor Markets

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  • Nicolas Canry
  • Julien Fouquau
  • Sébastien Lechevalier

Abstract

In this paper, we focus on the real dimension of the price dynamics in Japan between 1980 and 2000. We use a panel industry dataset to analyze the impact of institutional and structural factors on the heterogeneous price dynamics of 10 manufacturing sectors. Although the evolution of unit labor costs seems to be the driving force, our structural analysis underlines the importance of the increasingly competitive environment, as captured by rising import penetration. Along with the decline of bargaining power of the workforce, this is at the origin of the deflationary pressures that characterized the Japanese economy during the Lost Decade.

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Bibliographic Info

Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 53 (2010)
Issue (Month): 3/4 ()
Pages: 357-374

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Handle: RePEc:bxr:bxrceb:2013/81137

Note: Special Issue "26th Symposium of Money, Banking and Finance" Guest Editors :Sébastien Galanti and Grégory Levieuge
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Related research

Keywords: Deflation; Japanese Economy; Wage Bargaining; Markup; Panel Regression;

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  1. Lynne Cockerell & Bill Russell, 1995. "Australian Wage and Price Inflation: 1971-1994," RBA Research Discussion Papers rdp9509, Reserve Bank of Australia.
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  11. Morrison, C J, 1994. "The Cyclical Nature of Markups in Canadian Manufacturing: A Production Theory Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(3), pages 269-82, July-Sept.
  12. Gary Saxonhouse, 2005. "Good deflation/bad deflation and Japanese economic recovery," International Economics and Economic Policy, Springer, vol. 2(2), pages 201-218, November.
  13. Hurlin, Christophe, 2006. "Network effects of the productivity of infrastructure in developing countries," Policy Research Working Paper Series 3808, The World Bank.
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  15. Taimur Baig, 2003. "Understanding the Costs of Deflation in the Japanese Context," IMF Working Papers 03/215, International Monetary Fund.
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