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What caused the post-pandemic inflation in Italy? An application of Bernanke and Blanchard (2023)

Author

Listed:
  • Massimiliano Pisani

    (Bank of Italy)

  • Alex Tagliabracci

    (Bank of Italy)

Abstract

We estimate using Italian data the model proposed by Bernanke and Blanchard (2023) to explain the dynamics of prices and wages in the post-pandemic period in Italy. The empirical analysis shows that the model performs well in capturing inflation developments, which were mainly driven by the energy and food components, but the fit of the wage dynamics is not entirely satisfactory as the specific features of the Italian labor market are not adequately described by the econometric specification considered.

Suggested Citation

  • Massimiliano Pisani & Alex Tagliabracci, 2024. "What caused the post-pandemic inflation in Italy? An application of Bernanke and Blanchard (2023)," Questioni di Economia e Finanza (Occasional Papers) 851, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_851_24
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    References listed on IDEAS

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    1. Olivier J. Blanchard & Marianna Riggi, 2013. "WHY ARE THE 2000s SO DIFFERENT FROM THE 1970s? A STRUCTURAL INTERPRETATION OF CHANGES IN THE MACROECONOMIC EFFECTS OF OIL PRICES," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1032-1052, October.
    2. Corsello, Francesco & Neri, Stefano & Tagliabracci, Alex, 2021. "Anchored or de-anchored? That is the question," European Journal of Political Economy, Elsevier, vol. 69(C).
    3. Francesco Corsello & Alex Tagliabracci, 2023. "Assessing the pass-through of energy prices to inflation in the euro area," Questioni di Economia e Finanza (Occasional Papers) 745, Bank of Italy, Economic Research and International Relations Area.
    4. Cristina Conflitti & Matteo Luciani, 2019. "Oil Price Pass-through into Core Inflation," The Energy Journal, , vol. 40(6), pages 221-248, November.
    5. Gregory de Walque & Thomas Lejeune, 2024. "What caused the post-pandemic era inflation in Belgium? Replication of the Bernanke-Blanchard model for Belgium," Working Paper Research 447, National Bank of Belgium.
    6. repec:aen:journl:ej40-6-luciani is not listed on IDEAS
    7. Tiziano Ropele & Alex Tagliabracci, 2024. "Perceived economic effects of the war in Ukraine: survey-based evidence from Italian firms," Applied Economics Letters, Taylor & Francis Journals, vol. 31(4), pages 275-280, February.
    8. Guido Bulligan & Francesco Corsello & Stefano Neri & Alex Tagliabracci, 2021. "De-anchored long-term inflation expectations in a low growth, low rate environment," Questioni di Economia e Finanza (Occasional Papers) 624, Bank of Italy, Economic Research and International Relations Area.
    9. Koester, Gerrit & Grapow, Helen, 2021. "The prevalence of private sector wage indexation in the euro area and its potential role for the impact of inflation on wages," Economic Bulletin Boxes, European Central Bank, vol. 7.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Domenico Depalo & Salvatore Lo Bello, 2024. "Accounting for the recent inflation burst in the euro area," Questioni di Economia e Finanza (Occasional Papers) 871, Bank of Italy, Economic Research and International Relations Area.
    2. Stefan Hohberger, 2025. "Germany’s macroeconomic drivers during the pandemic and inflation surge," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-49, February.
    3. Beatrice Pataracchia & Philipp Pfeiffer & Marco Ratto & Jan Teresiński, 2025. "Energy Commodity Price Shocks in the Euro Area Evidence from a Large-Scale Structural Model," European Economy - Discussion Papers 233, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Aldama, Pierre & Le Bihan, Hervé & Le Gall, Claire, 2025. "What caused the post-pandemic inflation in France? An analysis using the Bernanke–Blanchard model," Journal of Macroeconomics, Elsevier, vol. 85(C).
    5. Nuno Vilarinho Goncalves, 2024. "Post-pandemic inflation dynamics in Portugal: an application of the Bernanke-Blanchard model," Working Papers w202418, Banco de Portugal, Economics and Research Department.

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    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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