Regional Inflation and Consumption Behaviors

Nagayasu, Jun (2015): Regional Inflation and Consumption Behaviors.

Abstract

This paper analyzes empirically interaction between the inflation rates across regions using consumption data on services and the geographical location of regions in Japan. The service sector has been expanding rapidly in terms of its contribution to the total economic activity in advanced countries, and further demographic changes have accelerated its speed in Japan over recent decades. After providing a theoretical relationship between regional inflation and consumption of non-tradable goods, we find evidence that different consumption patterns of services across regions explain heterogeneity in regional inflation in Japan.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regional inflation; non-tradable goods; services; demographic changes; spatial models
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles; F - International Economics > F3 - International Finance; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics

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