European Inflation Dynamics

Mark Gertler, Galí, Jordi and López-Salido, J David
Authors registered in the RePEc Author Service: J. David Lopez-Salido and Jordi Galí

No 2684, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We provide evidence on the fit of the New Phillips Curve (NPC) for the Euro area over the period 1970?1998, and use it as a tool to compare the characteristics of European inflation dynamics with those observed in the U.S. We also analyse the factors underlying inflation inertia by examining the cyclical behaviour of marginal costs, as well as that of its two main components, namely, labour productivity and real wages. Some of the findings can be summarized as follows: (a) the NPC fits Euro area data very well, possibly better than US data, (b) the degree of price stickiness implied by the estimates is substantial, but in line with survey evidence and US estimates, (c)\ inflation dynamics in the Euro area appear to have a stronger forward-looking component (i.e., less inertia) than in the US, (d) labour market frictions, as manifested in the behaviour of the wage markup, appear to have played a key role in shaping the behaviour of marginal costs and, consequenty, inflation in Europe.

Keywords: Inflation dynamics; New keynesian phillips curve; Emu; Sticky prices (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2001-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (775)

Downloads: (external link)
https://cepr.org/publications/DP2684 (application/pdf)

Related works:
Journal Article: European inflation dynamics (2001)
Working Paper: European Inflation Dynamics (2001)
Working Paper: European Inflation Dynamics (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:2684

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP2684

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().