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The link between labor cost and price inflation in the euro area

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Personen und Körperschaften: Bobeica, Elena (VerfasserIn), Ciccarelli, Matteo (VerfasserIn), Vansteenkiste, Isabel (VerfasserIn)
Titel: The link between labor cost and price inflation in the euro area/ Elena Bobeica, Matteo Ciccarelli, Isabel Vansteenkiste
Format: E-Book
Sprache: Englisch
veröffentlicht:
Frankfurt am Main, Germany European Central Bank [2019]
Gesamtaufnahme: Europäische Zentralbank: Working paper series ; no 2235 (February 2019)
Quelle: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
Details
Zusammenfassung: This paper documents, for the first time in a systematic manner, the link between labor cost and price inflation in the euro area. Using country and sector quarterly data over the period 1985Q1-2018Q1 we find a strong link between labor cost and price inflation in the four major economies of the euro area and across the three main sectors. The dynamic interaction between prices and wages is time-varying and depends on the state of the economy and on the shocks hitting the economy. Our results show that it is more likely that labor costs are passed on to price inflation with demand shocks than with supply shocks. However, the pass-through is systematically lower in periods of low inflation as compared to periods of high inflation. These results confirm that, under circumstances of predominantly demand shocks, labor cost increases will be passed on to prices. Coming from a period of low inflation, however, this pass-through could be moderate at least until inflation stably reaches a sustained path.
Umfang: 1 Online-Ressource (circa 66 Seiten); Illustrationen
ISBN: 9789289934978
9289934972
DOI: 10.2866/894414