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Are Prices Countercyclical? Evidence From the G-7
Author:
Mr. Eswar S Prasad
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and
Mr. Bankim Chadha
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 091
Language:
English
Publication Date:
01 Aug 1994
DOI:
https://doi.org/10.5089/9781451851472.001
ISBN:
9781451851472
ISSN:
1018-5941
Pages:
28
Keywords:
WP; price level; price; correlation; inflation rate; inflation-output correlation; positive correlation; HP-filtered price; price-output correlation; countercyclical price behavior; price cyclicality; aggregate price level; HP filter; HP-filtered output; Inflation; Business cycles; Unemployment rate; Cyclical unemployment; Unemployment
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund