Why Has Inflation in the United States Remained So Low? Reassessing the Importance of Labor Costs and the Price of Imports

Jorge Chan-Lau and Stephen Tokarick

No 1999/149, IMF Working Papers from International Monetary Fund

Abstract: This paper examines some of the factors that have been influential in keeping inflation low in the United States during 1995–98, despite strong growth and high levels of employment. Our results identify three important variables: declines in import prices, a slowdown in the growth of nonwage labor compensation, and a decline in labor costs. We also reassess the role of labor costs and import prices in determining price inflation.

Keywords: WP; cost; Phillips curve; price; salary; Inflation; labor costs; labor cost; wage inflation; consumer price inflation; inflation puzzle; wage Phillips curve; proxying inflation expectation; salary component; Labor share; Import prices (search for similar items in EconPapers)
Pages: 23
Date: 1999-11-01
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Citations: View citations in EconPapers (10)

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