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

Bowdler, Christopher; Nunziata, Luca

doi:10.1111/j.1467-9442.2007.00504.x

Cited by 17 publications

(30 citation statements)

References 17 publications

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“…The first column corresponds to the preferred model estimated in Bowdler and Nunziata () and the second column reports the estimates that replicate Bowdler and Nunziata's () model using our sample for the period 1961–2006. The results on the temporal update of Bowdler and Nunziata's () preferred specification suggest that the sign and the significance of the macroeconomic determinants of inflation as well as the interaction terms remain unchanged, with the exception of the direct taxation variable whose significance falls in the extended sample. The size of the coefficients remain roughly stable, although the effect of the evolution of taxes on inflation appears somewhat smaller.…”

Section: Estimation Resultsmentioning

confidence: 99%

“…In the reduced‐form model, inflation is explained by its own lag, which serves as a proxy for backward‐looking inflation expectations or persistence mechanisms, a macroeconomic measure of excess demand, that is the unemployment gap and the evolution of input costs, namely of labour productivity, import prices, and taxation. As in Bowdler and Nunziata (), the estimated inflation equations typically take the form:

π_{it} = γ_{0} + γ_{1}^{'} x_{1} + γ_{2}^{'} x_{2} + μ_{i} + λ_{t} + ε_{it},

where π denotes inflation, subscript i refers to the country and subscript t refers to the year. In equation , inflation is explained by the vector

x_{1}

of macroeconomic variables, the vector

x_{2}

of interaction effects between the macroeconomic determinants in

x_{1}

and the institutional characteristics considered, namely the degree of coordination in wage bargaining (

{COORD}_{it}

), the percentage unionization of the labour force (

{TU}_{it}

) and the degree of competition in goods markets (

{PMR}_{it}

).…”

Section: Econometric Strategymentioning

confidence: 99%

“…The institutions considered by the literature are varied and include, amongst others, labour market institutions, such as coordination in wage‐setting and unionization, monetary institutions, such as central bank independence, and exchange rate arrangements (e.g. Bruno and Sachs, ; Alogoskoufis and Smith, ; Burdekin and Siklos, ; Bowdler and Nunziata, ). In this spirit, the first contribution of the article is to explore the impact that product market institutions have on the response of inflation to its macroeconomic determinants.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Product Market Competition, Monetary Policy Regimes and Inflation Dynamics: Evidence from a Panel of OECD Countries

Correa‐López¹,

García-Serrador²,

Mingorance-Arnáiz

2013

Oxf Bull Econ Stat

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We empirically analyze the impact of product market competition on the responsiveness of inflation to macroeconomic imbalances. If competition is high the response of inflation to lagged inflation, unemployment and import prices is reduced, while inflation is more responsive to changes in productivity growth in countries in which competition is above the OECD average. Given the ('good luck') macroeconomic trajectories of the 1990s-2000s, the structural reforms that made goods markets more competitive improved the ability of OECD economies to smooth (dis)inflationary shocks, while changes in the monetary policy framework had a modest role in taming inflation during the Great Moderation.

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Section: Estimation Resultsmentioning

confidence: 99%

π_{it} = γ_{0} + γ_{1}^{'} x_{1} + γ_{2}^{'} x_{2} + μ_{i} + λ_{t} + ε_{it},

where π denotes inflation, subscript i refers to the country and subscript t refers to the year. In equation , inflation is explained by the vector

x_{1}

of macroeconomic variables, the vector

x_{2}

of interaction effects between the macroeconomic determinants in

x_{1}

and the institutional characteristics considered, namely the degree of coordination in wage bargaining (

{COORD}_{it}

), the percentage unionization of the labour force (

{TU}_{it}

) and the degree of competition in goods markets (

{PMR}_{it}

).…”

Section: Econometric Strategymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Product Market Competition, Monetary Policy Regimes and Inflation Dynamics: Evidence from a Panel of OECD Countries

Correa‐López¹,

García-Serrador²,

Mingorance-Arnáiz

2013

Oxf Bull Econ Stat

View full text Add to dashboard Cite

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“…Therefore we control for unit labour cost in the empirical model below. Furthermore, Bowdler and Nunziata (2005) conduct an empirical analysis where they replace unit labour cost in a priceequation with wage determining factors. They do find effects of wage setting institutions, but the interpretation is still different from the findings in the present paper.…”

Section: Literature and Economic Theorymentioning

confidence: 99%

“…Sen and Dutt (1995) set up a theoretical model where bargaining power affects wages and where the wage level influences the markup. Furthermore, Bowdler and Nunziata (2005) conduct an empirical analysis where they replace unit labour cost in a price equation with wage determining factors. Layard et al (1991) consider the issues of wage bargaining and trade unions in some detail, but without linking coordination _________________________ of wage determination and price determination.…”

Section: Introductionmentioning

confidence: 99%

Increased Price Markup from Union Coordination – OECD Panel Evidence

Bjørnstad

Kalstad

2010

Economics

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Although coordination of wage bargaining probably affects entry barriers and competition in product markets, research on price determination has typically not considered such factors. We argue that the price markup depends on wage setting institutions and present empirical evidence in form of estimated price equations in a panel of 15 OECD countries. The estimates show that consumer prices may be as much as 21 percent higher in coordinated compared to uncoordinated countries, solely due to the effect of coordination on the markup. Since other studies find that coordination has a dampening effect on wages, this may explain why there is no clear effect of coordination on unemployment.JEL C23, E31, J51

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Monetary effects of inequality: lessons from the euro experiment

Filippin

Nunziata

2018

J Econ Inequal

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We propose a new explanation for the decoupling of official and perceived inflation based on relative consumption concerns. In presence of high inequality, when the consumers' reference point of consumption is more distant to reach, a tight budget constraint is likely to be misperceived as a currency's loss of purchasing power. Using data from a set of 15 European countries in the period 1990-2008, we estimate the effect of inequality on inflation perception. Our research design exploits the exogenous variation in inequality induced by the reduction in social expenditure that accompanied the implementation of the convergence criteria set up by the Maastricht treaty, in the years preceding the Euro changeover. Our results confirm that an increase in inequality significantly affects the deviation of inflation perceptions from actual inflation.

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

Cited by 17 publications

References 17 publications

Product Market Competition, Monetary Policy Regimes and Inflation Dynamics: Evidence from a Panel of OECD Countries

Product Market Competition, Monetary Policy Regimes and Inflation Dynamics: Evidence from a Panel of OECD Countries

Increased Price Markup from Union Coordination – OECD Panel Evidence

Monetary effects of inequality: lessons from the euro experiment

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