Arbeitspapier
Globalisation and the Decoupling of Inflation from Domestic Labour Costs
We provide novel systematic cross-country evidence that the link between domestic labour markets and CPI inflation has weakened considerably in advanced economies during recent decades. The central estimate is that the short-run pass-through from domestic labour cost changes to core CPI inflation decreased from 0.25 in the 1980s to just 0.02 in the 2010s, while the longrun pass-through fell from 0.36 to 0.03, with the estimates in the 2010s no longer significant. We show that the timing of the collapse in the pass-through coincides with a steep increase in import penetration from a group of major manufacturing EMEs around the turn of the millennium, which signals increased competition and market contestability.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 9281
- Classification
-
Wirtschaft
Price Level; Inflation; Deflation
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
Trade: General
Economic Impacts of Globalization: General
Wages, Compensation, and Labor Costs: General
- Subject
-
competition
globalisation
import penetration
inflation
labour market
pass-through
wage
- Event
-
Geistige Schöpfung
- (who)
-
Kohlscheen, Emanuel
Moessner, Richhild
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2021
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kohlscheen, Emanuel
- Moessner, Richhild
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2021
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