How Fast Are Prices in Japan Falling?

Satoshi Imai, Chihiro Shimizu and Tsutomu Watanabe
Additional contact information
Satoshi Imai: Statistics Bureau of Japan
Chihiro Shimizu: Reitaku University; University of British Columbia
Tsutomu Watanabe: Graduate School of Economics,University of Tokyo

No 1, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: The consumer price inflation rate in Japan has been below zero since the mid-1990s. However, despite the presence of a substantial output gap, the rate of deflation has been much smaller than that observed in the United States during the Great Depression. Given this, doubts have been raised regarding the accuracy of Japan’s official inflation estimates. Against this background, the purpose of this paper is to investigate to what extent estimates of the inflation rate depend on the methodology adopted. Our specific focus is on how inflation estimates depend on the method of outlet, product, and price sampling employed. For the analysis, we use daily scanner data on prices and quantities for all products sold at about 200 supermarkets over the last ten years. We regard this dataset as the “universe” and send out (virtual) price collectors to conduct sampling following more than sixty different sampling rules. We find that the officially released outcome can be reproduced when employing a sampling rule similar to the one adopted by the Statistics Bureau. However, we obtain numbers quite different from the official ones when we employ different rules. The largest rate of deflation we find using a particular rule is about 1 percent per year, which is twice as large as the official number, suggesting the presence of substantial upward-bias in the official inflation rate. Nonetheless, our results show that the rate of deflation over the last decade is still small relative to that in the United States during the Great Depression, indicating that Japan’s deflation is moderate.

Keywords: consumer price index; scanner data; deflation; outlet sampling; product sampling; purposive sampling; random sampling; sampling bias (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012-05, Revised 2012-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.price.e.u-tokyo.ac.jp/img/researchdata/pdf/p_wp001.pdf Revised version, 2012 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://www.price.e.u-tokyo.ac.jp/img/researchdata/pdf/p_wp001.pdf [302 Moved Temporarily]--> https://www.price.e.u-tokyo.ac.jp/img/researchdata/pdf/p_wp001.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upd:utppwp:001

Access Statistics for this paper

More papers in UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics University of Tokyo 702 Faculty of Economics, The University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo, 113-0033, Japan. Contact information at EDIRC.
Bibliographic data for series maintained by Yayoi Hatano ().