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The Persistence of Inflation in Switzerland

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  • Simone Elmer
  • Thomas Maag

Abstract

This paper investigates persistence of Swiss consumer price inflation using aggregate and disaggregate inflation data covering 1983-2008. We document that persistence of sectoral inflation rates is below persistence of aggregate inflation. Our main finding is that inflation persistence significantly declines in the early 1990s. An estimated factor model reveals that inflation persistence stems from a persistent component that is common to inflation rates across sectors. Both the relevance and the persistence of the common component decline over time. Depending on the sample period and aggregation level, 70 to 90 percent of the variance in sectoral inflation rates is accounted for by short-lived sectoral factors.

Suggested Citation

  • Simone Elmer & Thomas Maag, 2009. "The Persistence of Inflation in Switzerland," KOF Working papers 09-235, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:09-235
    DOI: 10.3929/ethz-a-005888618
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    Cited by:

    1. Oleg KITOV & Ivan KITOV, 2012. "Inflation And Unemployment In Switzerland: From 1970 To 2050," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 7(2(20)/ Su), pages 141-156.
    2. Kaufmann, Daniel & Lein, Sarah M., 2013. "Sticky prices or rational inattention – What can we learn from sectoral price data?," European Economic Review, Elsevier, vol. 64(C), pages 384-394.
    3. Marc P. Giannoni & Attilio Zanetti, 2010. "Discussion: Unemployment and Monetary Policy in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(I), pages 209-220, March.

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