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Deflation and Relative Prices: Evidence from Japan and Hong Kong

Gerlach, Stefan and Kugler, Peter. (2007) Deflation and Relative Prices: Evidence from Japan and Hong Kong. WWZ Discussion Papers, 2007 (08).

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Abstract

We test the menu cost model of Ball and Mankiw (1994, 1995), which implies NEWLINE that the impact of price dispersion on inflation should differ between inflation and NEWLINE deflation episodes, using data for Japan and Hong Kong. We use a random crosssection NEWLINE sample split when calculating the moments of the distribution of price NEWLINE changes to mitigate the small-cross-section-sample bias noted by Cecchetti and NEWLINE Bryan (1999). The parameter on the third moment is positive and significant in NEWLINE both countries during both the inflation and deflation periods, and the parameter NEWLINE on the second moment changes sign in the deflation period, as the theory predicts.
Faculties and Departments:06 Faculty of Business and Economics
06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften
06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Geld- und Währungsgeschichte (Kugler)
06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > WWZ Forum
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Kugler, Peter
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:26
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2007/08
Last Modified:09 Mar 2018 10:53
Deposited On:07 Mar 2018 11:27

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