Abstract
We use a panel dataset containing the Consumer Price Indices (CPI) of different specifications over 52 major cities of Japan from 2016 to 2020 to investigate whether the COVID-19 pandemic outbreak offset the effort of 2% inflation targeting. Using difference-in-difference method, we find that the pandemic led to price decrease in most necessity items. This could be owed to a number of factors that contribute to both supply and demand shock, such as unemployment, decline in working hours, change in productivity, and personal financial conditions. The trend is more significant in cities outside the capital region, with more confirmed cases, with lower income, having higher mobility restrictions, higher unemployment rate, and higher urbanization level. It is still necessary to learn about the long-term impact of COVID-19 on inflation levels in various social contexts.
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Chen, K. (2023). Measuring COVID-19’s Shock to Economy: Evidence from Japan’s Inflation Rate. In: Dang, C.T., Cifuentes-Faura, J., Li, X. (eds) Proceedings of the 2nd International Conference on Business and Policy Studies. CONF-BPS 2023. Applied Economics and Policy Studies. Springer, Singapore. https://doi.org/10.1007/978-981-99-6441-3_109
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DOI: https://doi.org/10.1007/978-981-99-6441-3_109
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