Outline

The Research Center for Price Dynamics (RCPD) was founded in 2005 as a core center for the study of inflation dynamics and monetary policy based on micro price data.

In 2006, the primary objective of the center was expressed as follows:

Low inflation has been a fact of economic life in many countries over the last two decades. This tendency is particularly clear for the Japanese economy: the inflation rate was close to zero even during the bubble period in the late 1980s; it has been staying below zero since the latter half of the 1990s. These clearly suggest that the nature of the inflation process has changed in a manner that has made high inflation less likely than in the 1960s and 70s. The purpose of this project is to study the causes and implications of such a change in the inflation process. The key idea is that a decline in the inflation rate at the macro level should be closely related to changes in firms’ microeconomics behaviors.

Since its inception, the RCPD has been producing a significant amount of impactful research that has led to a better understanding of the mechanism of firm-level price dynamics as well as the role of financial markets. In 2011, we decided to widen our research scope. In addition, in order to study firm- and store-level behavior, we began to investigate household-level purchase decisions. This was done by extending our database to scanner data that track household-level shopping records. By investigating both the demand and supply sides of commodity transactions, the RCPD attempts to understand the mechanisms behind the market transactions both at the micro and macro level.