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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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File URL: http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2010/2qtr2010_part2_hu_toussaint_comeau.pdf
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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. Yash P. Mehra, 2004. "The output gap, expected future inflation and inflation dynamics: another look," Working Paper 04-06, Federal Reserve Bank of Richmond.
  2. 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.
  3. 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.
  4. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 147-180, February.
  5. Margaret M. McConnell & Gabriel Perez Quiros, 1997. "Output fluctuations in the United States: what has changed since the early 1980s?," Research Paper 9735, Federal Reserve Bank of New York.
  6. Lars E. O. Svensson, 1996. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," NBER Working Papers 5797, National Bureau of Economic Research, Inc.
  7. 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.
  8. Guy Meredith & Bankim Chadha & Paul R. Masson, 1991. "Models of Inflation and the Costs of Disinflation," IMF Working Papers 91/97, International Monetary Fund.
  9. Sbordone, Argia, 1998. "Prices and Unit Labor Costs: A New Test of Price Stickiness," Seminar Papers 653, Stockholm University, Institute for International Economic Studies.
  10. 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.
  11. James H. Stock & Mark W. Watson, 2008. "Phillips Curve Inflation Forecasts," NBER Working Papers 14322, National Bureau of Economic Research, Inc.
  12. 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.
  13. 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.
  14. Jordi Gali & Mark Gertler, 2000. "Inflation Dynamics: A Structural Econometric Analysis," NBER Working Papers 7551, National Bureau of Economic Research, Inc.
  15. 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.
  16. Jeff Fuhrer & George Moore, 1993. "Inflation persistence," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
  17. Fosu, Augustin Kwasi & Huq, Shamsul, 1988. "Price inflation and wage inflation : A cause-effect relationship?," Economics Letters, Elsevier, vol. 27(1), pages 35-40.
  18. repec:fip:fedcpd:y:2000:i:apr:p:1-14:n:1 is not listed on IDEAS
  19. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
  20. 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.
  21. 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.
  22. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  23. Benati, Luca, 2008. "Investigating inflation persistence across monetary regimes," Working Paper Series 0851, European Central Bank.
  24. 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.
  25. 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.
  26. 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.
  27. Joseph Stiglitz, 1997. "Reflections on the Natural Rate Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 3-10, Winter.
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