Japan's Inflation under Global Inflation Synchronization

Ichiro Fukunaga, Yosuke Kido and Kotaro Suita
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Kotaro Suita: Bank of Japan

No 24-E-4, Bank of Japan Working Paper Series from Bank of Japan

Abstract: In this paper, with a brief examination of the global inflation synchronization, we analyze the effects of domestic and global factors on Japan's consumer price inflation and related variables (inflation expectations, nominal wages, etc.) since the late 1990s, when Japan fell into deflation, mainly using structural vector autoregression (SVAR) models with short- and long-run zero and sign restrictions. Historical decompositions show that various types of global shocks, including downward cost pressure due to globalization, had continuously pushed down Japan's consumer prices until the late 2010s. Subsequently, their contribution reversed, significantly pushing up prices, especially in the high-inflation phase after the pandemic. In addition, we find that service prices and nominal wages, which had not been much affected by global shocks, have also been pushed up significantly by global shocks in the recent period.

Keywords: Inflation; Monetary policy; Globalization (search for similar items in EconPapers)
JEL-codes: E31 E52 F62 (search for similar items in EconPapers)
Date: 2024-04-26
New Economics Papers: this item is included in nep-ban and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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