Are Prices Countercyclical? Evidence From the G-7

August 1, 1994

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Format: Chicago

Eswar S Prasad, and Bankim Chadha. Are Prices Countercyclical? Evidence From the G-7, (USA: International Monetary Fund, 1994) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Business cycles, Cyclical unemployment, Economic growth, Inflation, Labor, Prices, Unemployment, Unemployment rate

Keywords: Aggregate price level, Business cycles, Correlation, Countercyclical price behavior, Cyclical unemployment, HP filter, HP-filtered output, HP-filtered price, Inflation, Inflation rate, Inflation-output correlation, Positive correlation, Price, Price cyclicality, Price level, Price-output correlation, Unemployment, Unemployment rate, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/091
Stock No:

WPIEA0911994
ISBN:

9781451851472
ISSN:

1018-5941

Notes

Study based on postwar quarterly data for the G-7.

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