Work

Interindustry linkages of prices—Analysis of Japan’s deflation

Year: 2020

Type: article

Abstract: The interactions among macroprices with leads and lags play a significant role in explaining the behavior of an aggregate price index. Thus, to understand inflation and deflation, it is essential to explore the mechanism according to which these macroprices interact with each other. On the basis of a new method, we show that, irrespective of the sources of shocks, a robust flow of changes occurs in domestic prices from upstream to downstream. Moreover, we demonstrate that macroprices change in clusters, and we identify these clusters. Firms are not symmetric. Overall, our analysis suggests that the inertia arising from input/output linkages in production explains the behavior of aggregate prices.

Source: PLoS ONE

DOI: 10.1371/journal.pone.0228026

Authors: Yuichi Kichikawa, Hiroshi Iyetomi, Hideaki Aoyama, Yoshi Fujiwara, Hiroshi Yoshikawa

Institutions: Niigata University, University of Hyogo, Kyoto University, Research Institute of Economy, Trade and Industry, Rissho University

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,695

Funders: Ministry of Education, Culture, Sports, Science and Technology, Kyoto University, Research Institute of Economy, Trade and Industry, Japan Society for the Promotion of Science