Are wages useful in forecasting price inflation?

Rhys Bidder

FRBSF Economic Letter, 2015

Abstract: Labor costs constitute a substantial share of business expenses, and it is natural to expect wages to be an important determinant of prices. However, research suggests that wages do not contain much useful information for forecasting price inflation that is not available from other indicators. Therefore, one should not infer too much from recent wage data regarding the future path of inflation.

Date: 2015
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