Learning about wage and price mark-ups in euro area countries

"In this paper we show that higher flexibility, measured by lower wage and price mark-ups leads to reduced inflationary pressures, increase in competitiveness, and higher output. A rational expectation and a learning version of the ECB’s New Multi-Country Model are used to understand plausible...

Full description

Bibliographic Details
Main Authors: Angelini, Elena, Dieppe, Alistair, Pierluigi, Beatrice
Institution:ETUI-European Trade Union Institute
Format: TEXT
Language:English
Published: Frankfurt am Main 2013
ECB
Subjects:
Online Access:https://www.labourline.org/KENTIKA-19129255124919474379-Learning-about-wage-and-price-.htm
_version_ 1771659901688348672
author Angelini, Elena
Dieppe, Alistair
Pierluigi, Beatrice
author_facet Angelini, Elena
Dieppe, Alistair
Pierluigi, Beatrice
collection Library items
description "In this paper we show that higher flexibility, measured by lower wage and price mark-ups leads to reduced inflationary pressures, increase in competitiveness, and higher output. A rational expectation and a learning version of the ECB’s New Multi-Country Model are used to understand plausible dynamics of labour cost and price adjustments. In the rational expectation version of the model gains are quicker but more short-lived than in a learning environment. We argue that a rational expectation model appears appropriate to describe the abrupt wage adjustment which took place in the Baltic States. By contrast, a learning model appears better suited to capture the gradual wage adjustment of Germany during the 2000s and the one that started in Spain and Italy after the 2008-09 crisis. In fact, in view of implementation lags and the need to change institutions, in the above countries the adjustment should be expected to deliver output gains less quickly than in the Baltic States. In this paper we use the linked version of the model to evaluate the aggregate impact of the imposed shocks as well as possible spillover effects within the euro area. All in all, spillover effects are relatively small."
format TEXT
geographic EU countries
id 19129255124919474379_89cd8eaaaf364cb1b9e680a22334a212
institution ETUI-European Trade Union Institute
is_hierarchy_id 19129255124919474379_89cd8eaaaf364cb1b9e680a22334a212
is_hierarchy_title Learning about wage and price mark-ups in euro area countries
language English
physical 29 p.
Digital
publishDate 2013
publisher Frankfurt am Main
ECB
spellingShingle Angelini, Elena
Dieppe, Alistair
Pierluigi, Beatrice
competitiveness
labour cost
price policy
wage policy
Learning about wage and price mark-ups in euro area countries
thumbnail https://www.labourline.org/Image_prev.jpg?Archive=111080293926
title Learning about wage and price mark-ups in euro area countries
topic competitiveness
labour cost
price policy
wage policy
url https://www.labourline.org/KENTIKA-19129255124919474379-Learning-about-wage-and-price-.htm