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Inflationary pressures, wages and profits

Author

Listed:
  • Hassan Faryaar
  • Danny Leung

Abstract

At 6.8% on an annual average basis, Consumer Price Index (CPI) inflation in 2022 reached a 40-year high. Survey data from Statistics Canada suggest that rising prices have affected many Canadians’ ability to meet day-to-day expenses and have led to a need to adjust spending habits to cope with inflation. To better understand the nature of high inflation and how it may evolve in the future, studies have looked at potential driving sources. For example, in Canada, Wang (2023) estimated the impact of import prices on inflation. Chen and Tombe (2023) examined the relative importance of supply and demand shocks in a perfectly competitive market. Faryaar et al. (2023) studied the impacts of rising markups on inflation in an imperfectly competitive market. In the United States, Stiglitz and Regmi (2022) and Jarsulic (2022) argued that the negative supply shock was the main driver of inflation but sectoral demand shifts and market power also fuelled the problem. Thus, there are different ideas in the literature on the main driver of inflation.

Suggested Citation

  • Hassan Faryaar & Danny Leung, 2023. "Inflationary pressures, wages and profits," Economic and Social Reports 202300600005e, Statistics Canada, Analytical Studies and Modelling Branch.
    • Handle: RePEc:stc:stcp8e:202300600005e
    DOI: https://doi.org/10.25318/36280001202300600005-eng
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    References listed on IDEAS

    as
    1. Hassan Faryaar & Danny Leung & Alexandre Fortier-Labonté, 2023. "Markups and inflation: Evidence from firm-level data," Economic and Social Reports 202300600004e, Statistics Canada, Analytical Studies and Modelling Branch.
    2. Weimin Wang, 2023. "Import prices and inflation in Canada," Economic and Social Reports 202300600002e, Statistics Canada, Analytical Studies and Modelling Branch.
    3. repec:stc:stcp8e:2023006e is not listed on IDEAS
    4. Simcha Barkai, 2020. "Declining Labor and Capital Shares," Journal of Finance, American Finance Association, vol. 75(5), pages 2421-2463, October.
    5. Gumiel, José & Hahn, Elke, 2018. "The role of wages in the pick-up of inflation," Economic Bulletin Boxes, European Central Bank, vol. 5.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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