On the determinants of inflation in Italy: evidence of cost-push effects before the European Monetary Union

Giancarlo Bertocco, Luca Fanelli () and Paolo Paruolo

Economics and Quantitative Methods from Department of Economics, University of Insubria

Abstract: This paper provides evidence on price markup and inflation dynamics in Italy over the period 1970-1998. We investigate the price mark-up on imported and labor costs and its relation to inflation, using cointegration techniques. It is found that, despite different policy regimes across decades, the relation between the markup and inflation is remarkably stable, and useful in predicting inflation dynamics.This evidence clarifies that pure monetarist theories of inflation are not able to account for the price dynamics in Italy from the seventies up to stage III of the European Monetary Union.

Keywords: Inflation dynamics; mark-up model; monetary policy; Phillips curve; cointegration; equilibrium correction model. (search for similar items in EconPapers)
JEL-codes: C32 E00 E31 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-12
New Economics Papers: this item is included in nep-exp and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ins:quaeco:qf0223

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