Has the wage Phillips curve changed in the euro area?

Bulligan, Guido; Viviano, Eliana

doi:10.1186/s40173-017-0087-z

Cited by 24 publications

(18 citation statements)

References 23 publications

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“…These statements are in line with the results supporting the flattening of the Phillips curve after the financial crisis. Taking the wage Phillips curves into account, international results vary significantly (Bulligan and Viviano, 2016;Muto and Shintani, 2014). According to them, in Germany the connection between wage inflation and unemployment weakened, while in France, Italy and Spain strengthened.…”

Section: Literature Reviewmentioning

confidence: 99%

External and Domestic Drivers of Inflation: The Case Study of Hungary

Nagy¹,

Tengely²

2018

RJMF

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Subdued global economic activity, declining energy and commodity prices, the appearance of new technological innovations and inflation expectations anchored at historically low levels around the world were all factors that have tended to result in declining inflation rates at the global level since 2013. The relationship between globalization and inflation is a popular research topic among economists. According to the majority of the body of literature, globalization's and external factors' influence on national inflation rates increased in recent years. In this paper we investigate, how external and domestic drivers affect the Hungarian inflation. Hungary is an interesting case study, since openness of the country grew significantly, thus Hungary became one of the most open economy in the EU. The Hungarian experience can thus be interesting for countries with an increasing trend of openness. Using several statistical methods, we examined and analyzed the impact of external and domestic drivers of the Hungarian inflation, and how these external factors varied in time and how their effect on the domestic inflation has changed. Our results show, that the role of external factors in domestic inflation developments strengthened in the past period, and especially after 2012, the changes in inflation in Hungary were mainly influenced by external effects.

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Section: Literature Reviewmentioning

confidence: 99%

External and Domestic Drivers of Inflation: The Case Study of Hungary

Nagy¹,

Tengely²

2018

RJMF

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“…Galí, 2011) and recent empirical work (e.g. Bulligan and Viviano, 2017). In particular, our main specification is a hybrid Phillips curve that includes lagged nominal wage growth, w t−1 , and expected inflation, π e t :…”

Section: The Modelmentioning

confidence: 99%

“…The relationship between inflation and economic slack might also have waned in recent years due to increased central bank credibility and more firmly anchored inflation expectations (Ball and Mazumder, 2011;Blanchard, 2016), and the increasing role of globalization and external supply shocks (Stock, 2011;Gordon, 2013;Albuquerque and Baumann, 2017). In contrast, Bulligan and Viviano (2017) report a steepening of the wage Phillips curve in Italy, Spain and France where the sensitivity of hourly wage changes to labor market slack is found to have increased after the global financial crisis. Similarly, Skarica and Nobile (2016) report a steepening of the Phillips curve in Italy and Spain after the crisis, which according to the authors might reflect the impact of structural reforms.…”

Section: Introductionmentioning

confidence: 99%

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Time-Varying Wage Phillips Curves in the Euro Area with a New Measure for Labor Market Slack

2018

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Recently, the unemployment gap in the euro area has fallen markedly. However, wages increased less than predicted by traditional Phillips curves. Using Bayesian methods, we estimate the wage Phillips curve with time-varying parameters. We consider alternative measures for labor market slack, namely the unemployment gap and the European Commission's labor shortage indicator. Using the latter indicator, we find a steepening of the wage Phillips curve in Italy and France, and a stable Phillips curve in the Netherlands after the crisis. In Germany (Spain), both measures suggest a recent flattening (steepening) of the wage Phillips curve.

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“…In particular it is interesting to explore whether it is mainly driven by separations or accessions and which may be the channel behind it. One possible mechanism acts through the increased turnover of temporary workers (see Bulligan and Viviano, 2016). Firms that are constrained by wage rigidities may exploit the turnover of temporary workers whose contracts can be easily renegotiated, in order to adjust their average labour cost.…”

Section: Firms' Wage Rigidity and Employment Adjustmentsmentioning

confidence: 99%

Wage Rigidities and Business Cycle Fluctuations: A Linked Employer-Employee Analysis

et al. 2016

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This paper analyses wage dynamics in Italy in the last 25 years with special focus on the recent recession. Using linked employer-employee data we document the presence of a trade-off between wage and employment adjustments: firms experiencing more wage rigidities exhibit more employment adjustments. Over time, the average amount of nominal wage rigidities was subdued during the recession years. Most of the adjustments took place through the part of wages that is not negotiated at the national level. In a rather rigid institutional context, a larger share of temporary workers, whose contractual relationship may be terminated without cost and whose wages are more frequently renegotiated, served instead as a significant flexibility enhancing margin. More broadly, we find that larger firms, with a greater share of blue-collar workers or belonging to a sector in which firm bonuses represent a large part of annual earnings, were the ones displaying a higher level of wage flexibility.

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Has the wage Phillips curve changed in the euro area?

Cited by 24 publications

References 23 publications

External and Domestic Drivers of Inflation: The Case Study of Hungary

External and Domestic Drivers of Inflation: The Case Study of Hungary

Time-Varying Wage Phillips Curves in the Euro Area with a New Measure for Labor Market Slack

Wage Rigidities and Business Cycle Fluctuations: A Linked Employer-Employee Analysis

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