THE CYCLICAL BEHAVIOR OF PRICES - G-7 VERSUS NON-G7 COUNTRIES

The cyclical behaviour of prices and inflation is investigated for G-7 and seven non-G7 countries for the postwar period. The quarterly pric es are shown to be clearly countercyclical in the G-7 countries, while they are much less so in the non-G7 countries. Inflation is shown to move procyclically and this is more clearly pronounced in the G-7 than non-G7 countries. This discrepancy in results may result from the dem and-management policies that these non-G7 countries have adopted in th e past and this cautions the students of business cycles to pay attent ion to the peculiarities of each economy when modelling the business c ycle.