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Commodity prices, wages, and U.S. inflation in the twentieth century

Author

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  • HARRY BLOCH
  • A. MICHAEL DOCKERY
  • DAVID SAPSFORD

Abstract

We consider the impact of primary commodity prices and wages on U.S. inflation in the context of markup pricing. We estimate separate equations for world commodity prices, wage rates, and domestic finished goods prices using annual data for 1900 to 2001. We find complete pass-through of commodity prices and wages into inflation of finished goods prices, with both input prices having a positive and statistically significant impact. Demand has a direct negative impact on finished goods prices, a delayed and temporary positive impact on wages (through the unemployment rate), and a strong positive impact on primary commodity prices.

Suggested Citation

  • Harry Bloch & A. Michael Dockery & David Sapsford, 2004. "Commodity prices, wages, and U.S. inflation in the twentieth century," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(3), pages 523-545.
    • Handle: RePEc:mes:postke:v:26:y:2004:i:3:p:523-545
    DOI: 10.1080/01603477.2004.11051404
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    Cited by:

    1. Guglielmo Caporale & Luca Onorante & Paolo Paesani, 2012. "Inflation and inflation uncertainty in the euro area," Empirical Economics, Springer, vol. 43(2), pages 597-615, October.
    2. Eduardo F Bastian & Sébastien Charles & Jonathan Marie, 2024. "Inflation regimes and hyperinflation: a Post-Keynesian/structuralist typology," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 48(4), pages 681-708.
    3. Gianluigi Ferrucci & Rebeca Jiménez-Rodríguez & Luca Onorantea, 2012. "Food Price Pass-Through in the Euro Area: Non-Linearities and the Role of the Common Agricultural Policy," International Journal of Central Banking, International Journal of Central Banking, vol. 8(1), pages 179-218, March.
    4. Boufateh, Talel & Saadaoui, Zied, 2021. "The time-varying responses of financial intermediation and inflation to oil supply and demand shocks in the US: Evidence from Bayesian TVP-SVAR-SV approach," Energy Economics, Elsevier, vol. 102(C).
    5. Ferrucci, Gianluigi & Jiménez-Rodríguez, Rebeca & Onorante, Luca, 2010. "Food price pass-through in the euro area The role of asymmetries and non-linearities," Working Paper Series 1168, European Central Bank.
    6. Harry Bloch & A. Michael Dockery & David Sapsford, 2006. "Commodity Prices and the Dynamics of Inflation in Commodity‐Exporting Nations: Evidence from Australia and Canada," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 97-109, September.
    7. Harry Bloch & A. Michael Dockery & C. Wyn Morgan & David Sapsford, 2007. "Growth, Commodity Prices, Inflation And The Distribution Of Income," Metroeconomica, Wiley Blackwell, vol. 58(1), pages 3-44, February.
    8. Shahzad, Umer & Orsi, Bianca & Sharma, Gagan Deep, 2024. "Managing inflation expectations and the efficiency of monetary policy responses to energy crises," Energy Economics, Elsevier, vol. 133(C).
    9. Sébastien Charles & Eduardo Figueiredo Bastian & Jonathan Marie, 2021. "Inflation Regimes and Hyperinflation. A Post-Keynesian/Structuralist typology," CEPN Working Papers hal-03363240, HAL.
    10. Ghosh, Dipak & Ruziev, Kobil, 2008. "Cost-Determined and Demand-Determined Prices: Lessons for the Industrialised World from Development Economics," Stirling Economics Discussion Papers 2008-22, University of Stirling, Division of Economics.
    11. Jing Sun & Jinhui Xu & Xin Cheng & Jichao Miao & Hairong Mu, 2023. "Dynamic causality between PPI and CPI in China: A rolling window bootstrap approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1279-1289, April.
    12. Coutts, Ken & Norman, Neville R., 2007. "Global influences on UK manufacturing prices: 1970-2000," European Economic Review, Elsevier, vol. 51(5), pages 1205-1221, July.
    13. Afees A. Salisu & Raymond Swaray & Idris Adediran, 2018. "Improving the predictability of commodity prices in US inflation: The role of coffee price," Working Papers 041, Centre for Econometric and Allied Research, University of Ibadan.
    14. Nathan Perry & Nathaniel Cline, 2016. "What caused the great inflation moderation in the US? A post-Keynesian view," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 475-502, October.
    15. Tine Olsen & Brett Inder, 2008. "Coffee Commodity Chain," Monash Economics Working Papers 06/08, Monash University, Department of Economics.

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