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Sectoral Price Dynamics in Japan: A Threshold Approach

Author

Listed:
  • Nicolas Canry

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Julien Fouquau

    (Pôle Finance Responsable - Rouen Business School - Rouen Business School)

  • Sebastien Lechevalier

    (CCJ - Chine, Corée, Japon - EHESS - École des hautes études en sciences sociales - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper focuses on the real - as opposed to the monetary - side of the economy to explain price dynamics in Japan between 1981 and 2001. We use a panel industry dataset to examine the impact of institutional and structural factors on the heterogeneous price dynamics in 10 manufacturing sectors. Although the evolution of unit labor costs may seem to be the driving force of these price dynamics, our analysis underlines the importance of the increasingly competitive environment, as captured by rising import penetration. Along with the decline of bargaining power of the workforce, this is a key factor underlying the deflationary pressures that characterized Japanese manufacturing industries in the 1990s.

Suggested Citation

  • Nicolas Canry & Julien Fouquau & Sebastien Lechevalier, 2011. "Sectoral Price Dynamics in Japan: A Threshold Approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00945036, HAL.
    • Handle: RePEc:hal:cesptp:hal-00945036
    Note: View the original document on HAL open archive server: https://hal.science/hal-00945036
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    References listed on IDEAS

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    1. Hervé Boulhol & Sabien Dobbelaere & Sara Maioli, 2011. "Imports as Product and Labour Market Discipline," British Journal of Industrial Relations, London School of Economics, vol. 49(2), pages 331-361, June.
    2. Dobbelaere, Sabien, 2004. "Estimation of price-cost margins and union bargaining power for Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 22(10), pages 1381-1398, December.
    3. Julien Fouquau, 2008. "Threshold effects in Okun's Law: a panel data analysis," Economics Bulletin, AccessEcon, vol. 5(33), pages 1-14.
    4. Nicolas Canry & Julien Fouquau & Sébastien Lechevalier, 2010. "Price Dynamics In Japan (1981-2001): A Structural Analysis Of Mechanisms In The Goods And Labor Markets," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 53(3/4), pages 357-374.
    5. Gregor W. Smith, 2006. "The spectre of deflation: a review of empirical evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(4), pages 1041-1072, November.
    6. Gary Saxonhouse, 2005. "Good deflation/bad deflation and Japanese economic recovery," International Economics and Economic Policy, Springer, vol. 2(2), pages 201-218, November.
    7. Mr. Taimur Baig, 2003. "Understanding the Costs of Deflation in the Japanese Context," IMF Working Papers 2003/215, International Monetary Fund.
    8. Filip Abraham & Jozef Konings & Stijn Vanormelingen, 2009. "The effect of globalization on union bargaining and price-cost margins of firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 13-36, April.
    9. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
    10. Hansen, Bruce E., 1999. "Threshold effects in non-dynamic panels: Estimation, testing, and inference," Journal of Econometrics, Elsevier, vol. 93(2), pages 345-368, December.
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    Cited by:

    1. Sébastien Lechevalier & Brieuc Monfort, 2016. "Abenomics: Has it worked? Will it fail?," Working Papers halshs-01415428, HAL.
    2. Nishi, Hiroshi, 2011. "A VAR Analysis for the Growth Regime and Demand Formation Patterns of the Japanese Economy," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 10.
    3. Sebastien Lechevalier & Cyrille Dossougoin & Christophe Hurlin & Satoko Takaoka, 2014. "How did the Japanese Employment System Change?Investigating the Heterogeneity of Downsizing Practices across Firms," KIER Working Papers 883, Kyoto University, Institute of Economic Research.

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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