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Are Prices Countercyclical? Evidence From the G-7

  • Eswar Prasad
  • Bankim Chadha

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.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 94/91.

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Length: 28
Date of creation: 01 Aug 1994
Date of revision:
Handle: RePEc:imf:imfwpa:94/91
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