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Do prices move counter-cyclically?

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  • Torben Andersen
  • Niels Lynggard Hansen

Abstract

The cyclical properties of producer and consumer prices are analysed on quarterly data for the period 1961:1 to 1990:4 for 15 OECD countries. It is found that the cyclical properties of prices vary substantially over time and across countries. All countries have periods with pro- and counter-cyclical prices and thus both demand and supply shocks are important in accounting for business cycle fluctuations. Considering the lead and lag structure, it is generally found that price increases lead output decreases.

Suggested Citation

  • Torben Andersen & Niels Lynggard Hansen, 1996. "Do prices move counter-cyclically?," Applied Economics Letters, Taylor & Francis Journals, vol. 3(6), pages 379-383.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:6:p:379-383
    DOI: 10.1080/135048596356276
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    References listed on IDEAS

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    1. Backus, David K & Kehoe, Patrick J, 1992. "International Evidence of the Historical Properties of Business Cycles," American Economic Review, American Economic Association, vol. 82(4), pages 864-888, September.
    2. Cooley, Thomas F. & Ohanian, Lee E., 1991. "The cyclical behavior of prices," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 25-60, August.
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    Cited by:

    1. Niclas Andrén & Lars Oxelheim, 2011. "Exchange rate regime shift and price patterns," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 7(2), pages 153-178, April.

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