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LIST  December 2013

LIST December 2013

Subject:

Re: This Inflation Is Supposed To Be GOOD For Japanese Workers?

From:

Alexander Arthur <[log in to unmask]>

Reply-To:

NBR's Japan Forum <[log in to unmask]>

Date:

Mon, 2 Dec 2013 13:15:36 -0500

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (43 lines)

On inflation and wages:

My seasonally adjusted, all-Japan consumer price index for all items less food and energy shows that the price level hit a low in February of this year and has been rising ever since then. The October index is 0.45% above February. This is not galloping inflation, but a definite rise in overall prices, less the volatile items.

By the way, comparing the current month to the same month a year ago conveys an erroneous impression because the trend is U-shaped. (When you are compare a point on a rising part of the U to one on the falling part, the result can be close to a random number.) It is necessary to look at changes over the most recent  periods to find a change in trend, and to do that, it is necessary to make seasonal adjustments. Since the Statistics Bureau does not report seasonally adjusted series, it is necessary to do it yourself. 

Second, as in most things, timing is critical. The point of the monetary stimulus is to raise demand, which leads to higher output, which leads to higher demand for labor and, eventually, higher wages. What seems to be driving demand now is the wealth effect from higher stock market prices. But, this is only the first step. It can take 12-18 months for the other bits to kick in. 

I have been surprised by how fast the various the responses have been so far. In my reading, the textbook responses have been coming in as expected.

For those who want to do their own seasonal adjustments, the free Gretl program can do it on a Mac. On a Windows machine, the EU statistics bureau has a very good free program called Demetra (goddess of life's cycles and the harvest).

Arthur Alexander


On Dec 1, 2013, at 5:14 PM, Robert Cole wrote:

Here is a piece from my favorite  news aggregator, ZITE,  which  is consistent with Mike Smitkaís observations on the supposed end to deflation.  I donít know the author and Mike is in a better position to evaluate his data than I.
 
Bob Cole
:
 

This Inflation Is Supposed To Be GOOD For Japanese Workers?
Zero Hedge - Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter

Japanís new economic religion, lovingly dubbed Abenomics, relies mostly on a money-printing binge that monetizes the entire government deficit plus a chunk of its public debt, month after month. Printing yourself out of trouble and to wealth works every time. For the elite. This is a lesson learned from the Fed. But how are workers and consumers faring? And by implication the real economy?

 

Available on the App Store.



Sent from my iPad
Robert E. Cole


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