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Recent Developments in the Linkage between Wages and Prices

Author

Listed:
  • Tatsuya Ozaki

    (Bank of Japan)

  • Masahiro Jimbo

    (Bank of Japan)

  • Tomoyuki Yagi

    (Bank of Japan)

  • Akihito Yoshii

    (Bank of Japan)

Abstract

The prices of many items making up the CPI are affected by past significant fluctuations in import prices. As a result, it is not easy to identify upward pressure on prices stemming from the linkage between wages and prices. In this article, a number of different approaches are used to quantitatively measure the linkage between wages and prices. Results of analyses based on cost structures of items making up the CPI and analyses using time-series models suggest that moves to reflect wage increases in output prices are gradually spreading. It is important to determine developments in the linkage between wages and prices by continuously carrying out quantitative analyses from various standpoints including those approaches taken in this article, as well as by conducting qualitative analyses, such as interviews with firms, carefully.

Suggested Citation

  • Tatsuya Ozaki & Masahiro Jimbo & Tomoyuki Yagi & Akihito Yoshii, 2024. "Recent Developments in the Linkage between Wages and Prices," Bank of Japan Review Series 24-E-2, Bank of Japan.
    • Handle: RePEc:boj:bojrev:rev24e02
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    File URL: https://www.boj.or.jp/en/research/wps_rev/rev_2024/data/rev24e02.pdf
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    More about this item

    Keywords

    Consumer prices; Wage; Pass-Through; Time-varying parameter VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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