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Why Has Inflation in the United States Remained So Low? Reassessing the Importance of Labor Costs and the Price of Imports
Author:
Mr. Jorge A Chan-Lau
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and
Mr. Stephen Tokarick
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Series:
IMF Working Papers
Volume/Issue:
Volume 1999: Issue 149
Language:
English
Publication Date:
01 Nov 1999
DOI:
https://doi.org/10.5089/9781451856873.001
ISBN:
9781451856873
ISSN:
1018-5941
Pages:
23
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
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 1999: Issue 149