The Global Dimension of Inflation: Evidence from Factor-Augmented Phillips Curves

• Autores: Sandra Eickmeier, Katharina Pijnenburg
• Localización: Oxford bulletin of economics and statistics, ISSN 0305-9049, Vol. 75, Nº. 1, 2013 (Ejemplar dedicado a: Large Data Sets), págs. 103-122
• Idioma: inglés
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• Resumen

  • We examine the global dimension of inflation in 24 OECD countries between 1980 and 2007 in a Phillips curve framework. We decompose output gaps and changes in unit labour costs into common (or global) and idiosyncratic components using a factor analysis and introduce these components separately in the regression. We find that the common component of changes in unit labour costs has a notable impact on inflation. Movements in import price inflation (not driven by oil supply) and foreign competition and global interest rate developments also affect inflation. Policy makers need to carefully observe those variables when assessing inflation developments.