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Do labor market activities help predict inflation?

  • Luojia Hu
  • Maude Toussaint-Comeau

The authors conduct an empirical analysis of the role of labor market activities in inflation and conclude that wage growth is not very informative for predicting price inflation. But price inflation does seem to help predict wage growth.

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Article provided by Federal Reserve Bank of Chicago in its journal Economic Perspectives.

Volume (Year): (2010)
Issue (Month): Q II ()
Pages: 52-63

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Handle: RePEc:fip:fedhep:y:2010:i:qii:p:52-63:n:v.34no.2
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  1. Stockton, David J & Glassman, James E, 1987. "An Evaluation of the Forecast Performance of Alternative Models of Inflation," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 108-17, February.
  2. Svensson, Lars E.O., 1997. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," Seminar Papers 615, Stockholm University, Institute for International Economic Studies.
  3. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 195-222, October.
  4. Gabriel Perez-Quiros & Margaret M. McConnell, 2000. "Output Fluctuations in the United States: What Has Changed since the Early 1980's?," American Economic Review, American Economic Association, vol. 90(5), pages 1464-1476, December.
  5. Jeffrey R. Campbell & Ellen R. Rissman, 1994. "Long-run labor market dynamics and short-run inflation," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 15-27.
  6. Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
  7. Bankim Chadha & Paul R. Masson & Guy Meredith, 1992. "Models of Inflation and the Costs of Disinflation," IMF Staff Papers, Palgrave Macmillan, vol. 39(2), pages 395-431, June.
  8. Fosu, Augustin Kwasi & Huq, Shamsul, 1988. "Price inflation and wage inflation : A cause-effect relationship?," Economics Letters, Elsevier, vol. 27(1), pages 35-40.
  9. Ghali, Khalifa H, 1999. "Wage Growth and the Inflation Process: A Multivariate Cointegration Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(3), pages 417-31, August.
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  11. Chan Guk Huh & Bharat Trehan, 1992. "Modelling the time series behavior of the aggregate wage rate," Working Papers in Applied Economic Theory 92-04, Federal Reserve Bank of San Francisco.
  12. Argia M. Sbordone, 2001. "Prices and Unit Labor Costs: A New Test of Price Stickiness," Departmental Working Papers 200112, Rutgers University, Department of Economics.
  13. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
  14. Barth, James R & Bennett, James T, 1975. "Cost-push versus Demand-pull Inflation: Some Empirical Evidence: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 7(3), pages 391-97, August.
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  16. Rudd, Jeremy & Whelan, Karl, 2005. "New tests of the new-Keynesian Phillips curve," Journal of Monetary Economics, Elsevier, vol. 52(6), pages 1167-1181, September.
  17. James H. Stock & Mark W. Watson, 2008. "Phillips curve inflation forecasts," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 53.
  18. John H. Rogers & Ping Wang, 1993. "High inflation: causes and consequences," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Dec, pages 37-51.
  19. Franke, Reiner & Flaschel, Peter & Proano, Christian R., 2006. "Wage-price dynamics and income distribution in a semi-structural Keynes-Goodwin model," Structural Change and Economic Dynamics, Elsevier, vol. 17(4), pages 452-465, December.
  20. Mehra Yash P, 2004. "The Output Gap, Expected Future Inflation and Inflation Dynamics: Another Look," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-19, December.
  21. Matthias Doepke & Martin Schneider, 2006. "Inflation and the Redistribution of Nominal Wealth," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1069-1097, December.
  22. repec:oup:qjecon:v:123:y:2008:i:3:p:1005-1060 is not listed on IDEAS
  23. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  24. Benati, Luca, 2008. "Investigating inflation persistence across monetary regimes," Working Paper Series 0851, European Central Bank.
  25. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  26. Yash P. Mehra, 2004. "The output gap, expected future inflation and inflation dynamics: another look," Working Paper 04-06, Federal Reserve Bank of Richmond.
  27. repec:oup:qjecon:v:110:y:1995:i:1:p:127-59 is not listed on IDEAS
  28. Yun, Tack, 1996. "Nominal price rigidity, money supply endogeneity, and business cycles," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 345-370, April.
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