Does the dynamic time consistency model of inflation explain cross-country differences in inflations dynamics?

Boschen, John F.; Weise, Charles L.

doi:10.1016/j.jimonfin.2004.03.010

Cited by 6 publications

(11 citation statements)

References 31 publications

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“…The parameter multiplying lagged inflation decreases with central bank independence. This is consistent with the findings of Boschen and Weise (2004). Crucially from the point of view of this paper, the estimated effects of the labour market variables are robust.…”

Section: Resultssupporting

confidence: 91%

“…Bruno and Sachs (1985) argue that the relatively mild increase in German inflation following the oil price shocks of the 1970s was in part due to the corporatist structures in which German labour unions participated, as this set of arrangements facilitated a deceleration of wages that in turn restricted inflation pressures. In more recent contributions, Burdekin and Siklos (1999) and Boschen and Weise (2004) note a possible role for labour market structures in accounting for cross‐country differences in inflation dynamics.…”

Section: Labour Markets and Inflation Adjustmentmentioning

confidence: 99%

“…This issue is largely beyond the scope of the current paper, although in we provide some evidence that movements in the macroeconomic determinants of inflation are transitory. Instead, we focus on explanations for cross‐country differences in the responsiveness of inflation to supply‐ and demand‐side factors, extending the work of, inter alia , Burdekin and Siklos (1999) and Boschen and Weise (2004).…”

Section: Labour Markets and Inflation Adjustmentmentioning

confidence: 99%

“…Although the demand‐ and cost‐side variables that enter a reduced‐form inflation equation are likely to be similar across countries, the coefficients multiplying these variables differ substantially. Boschen and Weise (2004), for example, document large differences in the impact of oil and commodity price shocks on inflation rates across the OECD, and explain these differences using a measure of political support for low inflation. In this paper we examine the impact on inflation adjustment of two important characteristics of the labour market—the degree of coordination amongst labour organisations and the percentage unionisation of the workforce.…”

Section: Introductionmentioning

confidence: 99%

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Inflation Adjustment and Labour Market Structures: Evidence from a Multi‐country Study*

Bowdler¹,

Nunziata²

2007

Scandinavian J Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study Luca Nunziata Christopher Bowdler D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country StudyAn empirical analysis of the impact of labour market structures on the response of inflation to macroeconomic shocks is presented. Results based on a 20 country panel show that if labour market coordination is high, the effect on inflation of movements in unemployment, import prices, tax rates and productivity is dampened, both on impact and dynamically. In contrast, monopoly power in labour supply, measured by the percentage unionisation of the workforce, appears to amplify the response of inflation to its reduced form determinants. These findings are attributed to the behaviour of wages following movements in demand-and supply-side conditions. JEL Classification: E31, J51

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Section: Resultssupporting

confidence: 91%

Section: Labour Markets and Inflation Adjustmentmentioning

confidence: 99%

Section: Labour Markets and Inflation Adjustmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Inflation Adjustment and Labour Market Structures: Evidence from a Multi‐country Study*

Bowdler¹,

Nunziata²

2007

Scandinavian J Economics

View full text Add to dashboard Cite

show abstract

“…In contrast, Sibert (1992) argues that independent fiscal policies by member countries may produce too little inflation. The effects of shocks and country size on the inflationary bias are discussed in Boschen and Weise (2004), Spiegel and Valderrama (2003), and Martin (1994). 8 The intuition is that conservatism makes (expansionary) monetary policy painful.…”

Section: Introductionmentioning

confidence: 99%

Grand corruption instead of commitment? Reconsidering time-inconsistency of monetary policy

Bohn

2013

Journal of International Money and Finance

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Time Consistency, Subgame Perfectness, Solution Concepts and Information Patterns in Dynamic Models of Stabilization Policies

Dockner

Neck

Advances in Computational Economics

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Does the dynamic time consistency model of inflation explain cross-country differences in inflations dynamics?

Cited by 6 publications

References 31 publications

Inflation Adjustment and Labour Market Structures: Evidence from a Multi‐country Study*

Inflation Adjustment and Labour Market Structures: Evidence from a Multi‐country Study*

Grand corruption instead of commitment? Reconsidering time-inconsistency of monetary policy

Time Consistency, Subgame Perfectness, Solution Concepts and Information Patterns in Dynamic Models of Stabilization Policies

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