Understanding the recent behavior of U.S. inflation

One of the most surprising features of the long current expansion has been the decline in price inflation through the late 1990s. Some observers interpret the decline as evidence of a permanent change in the relationship between inflation and economic growth. But an analysis based on a standard forecasting model suggests that conventional economic factors_most notably, a decrease in import prices_can account for the low inflation rates in recent years.Inflation (Finance) ; Imports

Structural change in U.S. wage determination

This paper provides an empirical investigation into the determinants and stability of the aggregate wage inflation process in the United States over the 1967-2000 period. Using compensation per hour as the measure of wages, we specify a Phillips curve model that links wage growth to its past values as well as to the unemployment rate, price inflation, labor productivity growth, and an additional set of labor market variables. The results do not reject the hypothesis that real wages and labor productivity move proportionally in the long run. More important, endogenous structural break tests provide little evidence of model instability. We conclude that aggregate wage determination has remained stable over the last thirty years and that any recent shift in the inflation-unemployment relationship reflects developments outside the labor market.Inflation (Finance) ; Wages ; Labor productivity

Structural Change in U.S. Wage Determination

This paper provides an empirical investigation into the determinants and stability of the aggregate wage inflation process in the United States over the 1967-2000 period. Using compensation per hour as the measure of wages, we specify a Phillips curve model that links wage growth to its past values as well as to the unemployment rate, price inflation, labor productivity growth, and an additional set of labor market variables. The results do not reject the hypothesis that real wages and labor productivity move proportionally in the long run. More important, endogenous structural break tests provide little evidence of model instability. We conclude that aggregate wage determination has remained stable over the last thirty years and that any recent shift in the inflation-unemployment relationship reflects developments outside the labor market