Price and wage inflation persistence across countries and monetary regimes

Elton Beqiraj, Giovanni Di Bartolomeo () and Marco Di Pietro ()

No 150, CIMEO Working Paper Series from Centre for Investigation and Modelling of Experimental Observations (CIMEO)

Abstract: We augmented a macro-model with intrinsic-inflation inertia assuming that prices farer in the past are more likely to be reset. After estimating the model for seven economies, we compared price/wage structures and explored the possibility that their changes can be related to changes in policy stances. We find evidence for duration-dependent-price adjustments. Price and wage stickiness are correlated. Although positively sloped, after few periods, price-hazard functions often become flat as in Calvo-based models. Instead, wage-hazard shapes are in line with Taylor contracts. Regarding monetary policy stances, no systematic effect is found. Observed changes are explained by country-specific factors (e.g., market reforms).

Date: 2020-12
New Economics Papers: this item is included in nep-mac and nep-mon
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Journal Article: Price and wage inflation persistence across countries and monetary regimes (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ter:wpaper:00150

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