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Author: Jorge Alvarez
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 29
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Book Description
How often have wage-price spirals occurred, and what has happened in their aftermath? We investigate this by creating a database of past wage-price spirals among a wide set of advanced economies going back to the 1960s. We define a wage-price spiral as an episode where at least three out of four consecutive quarters saw accelerating consumer prices and rising nominal wages. Perhaps surprisingly, only a small minority of such episodes were followed by sustained acceleration in wages and prices. Instead, inflation and nominal wage growth tended to stabilize, leaving real wage growth broadly unchanged. A decomposition of wage dynamics using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels that are consistent with observed inflation and labor market tightness. When focusing on episodes that mimic the recent pattern of falling real wages and tightening labor markets, declining inflation and nominal wage growth increases tended to follow – thus allowing real wages to catch up. We conclude that an acceleration of nominal wages should not necessarily be seen as a sign that a wage-price spiral is taking hold.
Author: Jorge Alvarez
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 29
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Book Description
How often have wage-price spirals occurred, and what has happened in their aftermath? We investigate this by creating a database of past wage-price spirals among a wide set of advanced economies going back to the 1960s. We define a wage-price spiral as an episode where at least three out of four consecutive quarters saw accelerating consumer prices and rising nominal wages. Perhaps surprisingly, only a small minority of such episodes were followed by sustained acceleration in wages and prices. Instead, inflation and nominal wage growth tended to stabilize, leaving real wage growth broadly unchanged. A decomposition of wage dynamics using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels that are consistent with observed inflation and labor market tightness. When focusing on episodes that mimic the recent pattern of falling real wages and tightening labor markets, declining inflation and nominal wage growth increases tended to follow – thus allowing real wages to catch up. We conclude that an acceleration of nominal wages should not necessarily be seen as a sign that a wage-price spiral is taking hold.
Author: Allan Dizioli
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
This paper estimates a standard Dynamic Stochastic General Equilibrium (DSGE) model that includes a wage and price Phillip's curves with different expectation formation processes for Brazil and the USA. Other than the standard rational expectation process, we also use a limited rationality process, the adaptive learning model. In this context, we show that the separate inclusion of a labor market in the model helps to anchor inflation even in a situation of adaptive expectations, a positive output gap and inflation above target. The estimation results show that the adaptive learning model does a better job in fitting the data in both Brazil and the USA. In addition, the estimation shows that expectations are more backward-looking and started to drift away sooner in 2021 in Brazil than in the USA. We then conduct optimal policy exercises that prescribe early monetary policy tightening in the context of positive output gaps and inflation far above the central bank target.
Author: Mr. Anil Ari
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 64
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Book Description
This paper identifies over 100 inflation shock episodes in 56 countries since the 1970s, including over 60 episodes linked to the 1973–79 oil crises. We document that only in 60 percent of the episodes was inflation brought back down (or “resolved”) within 5 years, and that even in these “successful” cases resolving inflation took, on average, over 3 years. Success rates were lower and resolution times longer for episodes induced by terms-of-trade shocks during the 1973–79 oil crises. Most unresolved episodes involved “premature celebrations”, where inflation declined initially, only to plateau at an elevated level or re-accelerate. Сountries that resolved inflation had tighter monetary policy that was maintained more consistently over time, lower nominal wage growth, and less currency depreciation, compared to unresolved cases. Successful disinflations were associated with short-term output losses, but not with larger output, employment, or real wage losses over a 5-year horizon, potentially indicating the value of policy credibility and macroeconomic stability.
Author: Thomas Harr
Publisher: Springer Nature
ISBN: 3031577663
Category :
Languages : en
Pages : 201
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Book Description
Author: Weshah Razzak
Publisher: Taylor & Francis
ISBN: 1000880575
Category : Business & Economics
Languages : en
Pages : 377
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Book Description
This book explains inflation dynamic, using time series data from 1960 for 42 countries. These countries are different in every aspect, historically, culturally, socially, politically, institutionally, and economically. They are chosen on the basis of the data availability only and cover the Middle East and North Africa (MENA) region, Africa, Asia, the Caribbean, Europe, Australasia, and the United States. Inflation reached double digits in the developed countries in the 1970s and 80s, and then central banks, successfully stabilized it by anchoring inflation expectations for decades, until now. Conditional on common and country-specific shocks such as oil price shocks, financial and banking and political crises, wars, pandemics, natural disasters etc., the book tests various theoretical models about the long and short run relationships between money and prices, money growth and inflation, money growth and real output, expected inflation; the output gap, fiscal policy, and inflation, using a number of parametric and non-parametric methods, and pays attention to specifications and estimations problems. In addition, it explains why policymakers in inflation – targeting countries, e.g. the U.S., failed to anticipate the recent sudden rise in inflation. And, it examines the fallibility of the Modern Monetary Theory’s policy prescription to reduce inflation by raising taxes. This is a unique and innovative book, which will find an audience among students, academics, researchers, policy makers, analysts in corporations, private and central banks and international monetary institutions.
Author: International Monetary
Publisher: International Monetary Fund
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
Selected Issues
Author: Robert L. Hetzel
Publisher: Cambridge University Press
ISBN: 1139470647
Category : Political Science
Languages : en
Pages : 7
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Book Description
Details the evolution of the monetary standard from the start of the Federal Reserve through the end of the Greenspan era. The book places that evolution in the context of the intellectual and political environment of the time. By understanding the fitful process of replacing a gold standard with a paper money standard, the conduct of monetary policy becomes a series of experiments useful for understanding the fundamental issues concerning money and prices. How did the recurrent monetary instability of the 20th century relate to the economic instability and to the associated political and social turbulence? After the detour in policy represented by FOMC chairmen Arthur Burns and G. William Miller, Paul Volcker and Alan Greenspan established the monetary standard originally foreshadowed by William McChesney Martin, who became chairman in 1951. The Monetary Policy of the Federal Reserve explains in a straightforward way the emergence and nature of the modern, inflation-targeting central bank.
Author: Mr. Youssouf Kiendrebeogo
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 10
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Book Description
Mali’s wage bill has soared to levels not seen since the early 1990s. This may cause considerable opportunity costs—limiting fiscal space and potentially adding to inflationary pressures—as well as adversely affect medium-term debt sustainability as it weighs heavily on the primary deficit. This SIP investigates the extent and drivers of the recent wage increases and their fiscal and economic consequences. It concludes that across-the board salary freezes may help wage growth moderation in the short term but are politically difficult to implement. Structural reforms to strengthen wage bill management are critical to preserving medium-term fiscal sustainability.
Author: Mr. Luis Brandão-Marques
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 32
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Book Description
We examine whether changes in the distribution of household inflation expectations contain information on future inflation. We first discuss recent shifts in micro data from the US, UK, Germany, and Canada. We then zoom in on the US to explore econometrically whether distributional characteristics help predict future inflation. We find that the shape of the distribution of household expectations does indeed help predict one-year-ahead CPI inflation. Variance and skewness of household expectations’ distributions add predictive power beyond and above the median, especially in periods of high inflation. Remarkably, qualitatively, these results hold when including market-based measures and moments of the distribution of professional forecasts.
Author: United States. National Labor Relations Board. Office of the General Counsel
Publisher:
ISBN:
Category : Labor laws and legislation
Languages : en
Pages : 1024
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Book Description
