Advanced Search
MyIDEAS: Login to save this paper or follow this series

What Drives Inflation in the Major OECD Economies?

Contents:

Author Info

  • Diego Moccero
  • Shingo Watanabe
  • Boris Cournède

Abstract

This paper presents an empirical analysis of the determinants of inflation in the United States, Japan, the euro area and the United Kingdom, focusing on the role of resource utilisation, inflation expectations, inflation persistence and imported inflation. It also includes a cross-sectional analysis that focuses on inflation dynamics over episodes of persistent large slack and low inflation. The main findings of this analysis are as follows: i) During the crisis, the stability of inflation expectations has held up actual inflation, so far preventing the huge slack in resource utilisation from leading to a disinflationary spiral; ii) Disinflationary pressures also seem to have been moderated by the flattening of the Phillips curve in an environment of persistent large economic slack and low inflation; iii) The link between long-term inflation expectations and past inflation outcomes has become weaker over time and appears to have almost disappeared recently; iv) The estimated Phillips curves coupled with the November 2010 projection of explanatory variables presented in the OECD Economic Outlook No. 88 and excluding the recent period of strong commodity prices point to inflation remaining low but positive, except in Japan where deflation is expected to continue past end-2012; v) The inflation outlook and associated risks argue for withdrawing monetary policy accommodation gradually in the short term, while being vigilant about the build up of broad-based inflationary pressures over the medium term. Quels sont les facteurs d'inflation dans les économies de l'OCDE Cet article présente une analyse empirique des déterminants de l'inflation aux États-Unis, au Japon, dans la zone euro et au Royaume-Uni, mettant l'accent sur le rôle de l'utilisation des ressources, les anticipations d'inflation, la persistance de l'inflation et l'inflation importée. Il propose également une analyse de la dynamique de l'inflation au cours des épisodes durables de nette sous-utilisation des capacités et de faible inflation. Les principales conclusions de cette analyse sont les suivantes: i) Pendant la crise, la stabilité des anticipations d'inflation a empêché que le sous-emploi des ressources ne conduise à une spirale déflationniste, ii) Il semble également que les pressions désinflationnistes aient été modérées par l'aplatissement de la courbe de Phillips dans un contexte de faiblesse économique persistante et de basse inflation; iii) L’influence des derniers chiffres d’inflation sur les attentes d'inflation à long terme s'est affaiblie au fil du temps et semble avoir presque disparu récemment; iv) Des prévisions fondées sur les courbes de Phillips estimées et les projections des Perspectives Économiques de l’OCDE n°88 de novembre 2010 excluant la période récente de hausse des prix des produits de base suggèrent une inflation restant faible, mais positive d’ici à fin 2012, sauf au Japon où la déflation devrait se poursuivre au moins jusqu’au-delà de cette période; v) La configuration des risques à court terme et à moyen terme plaide pour un retrait progressif de l’expansion monétaire en demeurant vigilant quant au risque d’apparition de pressions inflationnistes à moyen terme.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://dx.doi.org/10.1787/5kgdx1jgvtf8-en
Download Restriction: no

Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 854.

as in new window
Length:
Date of creation: 08 Apr 2011
Date of revision:
Handle: RePEc:oec:ecoaaa:854-en

Contact details of provider:
Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Email:
Web page: http://www.oecd.org
More information through EDIRC

Related research

Keywords: Japan; United States; euro area; Phillips curves; core and headline inflation; inflation forecast; inflation expectations; resource slack; United Kingdom; disinflation; zone Euro; désinflation; fluctuation des ressources; courbes de Phillips; fondement et base de l'inflation; anticipations d'inflation; États-Unis; Royaume-Uni; Japon;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Perera, Anil & Ralston, Deborah & Wickramanayake, Jayasinghe, 2013. "Central bank financial strength and inflation: Is there a robust link?," Journal of Financial Stability, Elsevier, vol. 9(3), pages 399-414.
  2. Romain Bouis & Ane Kathrine Christensen & Boris Cournède, 2013. "Deleveraging: Challenges, Progress and Policies," OECD Economics Department Working Papers 1077, OECD Publishing.
  3. Thomas Mayer & Holger Schmieding & Manfred Jäger-Ambrozewicz & Michael Lamla & Jan-Egbert Sturm & Ulrich Kater & Leon Leschus & Wolfgang Brachinger, 2011. "Zinserhöhung der EZB: Wie groß ist die Inflationsgefahr?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(14), pages 03-26, 07.
  4. Wolfgang Pollan, 2013. "Inflation Persistence or the Protracted Effects of Commodity Price Changes?," WIFO Working Papers 451, WIFO.
  5. Fröhling, Annette & Lommatzsch, Kirsten, 2011. "Output sensitivity of inflation in the euro area: Indirect evidence from disaggregated consumer prices," Discussion Paper Series 1: Economic Studies 2011,25, Deutsche Bundesbank, Research Centre.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:854-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.