Unit labor costs and inflation in the OECD countries
This paper investigates the drivers of inflation in 34 Organization for Economic Cooperation and Development countries from the first quarter of 2020 to the fourth quarter of 2022. Using an amplified price equation and two different panel data econometric techniques, we assess the impact of seven k...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Associazione Economia civile
2024-04-01
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| Series: | PSL Quarterly Review |
| Subjects: | |
| Online Access: | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/18228 |
| Summary: | This paper investigates the drivers of inflation in 34 Organization for Economic Cooperation and Development countries from the first quarter of 2020 to the fourth quarter of 2022. Using an amplified price equation and two different panel data econometric techniques, we assess the impact of seven key variables on the price level. In this context, unit labor costs are a major source of price instability, whereas massive cash transfers generate demand-pull inflation. Moreover, higher financial costs are potentially inflationary, debt/contract relief policies are deflationary, and pandemic-related variables deliver mixed effects on prices. These findings have clear-cut policy implications.
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| ISSN: | 2037-3635 2037-3643 |