Exchange Rate Movements and Inflation Performance : The Case of Italy

Author/Editor:

Robert Ford ; Thomas Krueger

Publication Date:

April 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper presents an empirical model to study the response of wages and prices to movements in the nominal exchange rate. A four-equation model is applied to Italian data to evaluate the response of tradeable goods prices, consumer prices, and wages following the lira’s exit from the ERM in the fall of 1992. The model tracks reasonably well the inflation performance of tradeables, especially import prices. But it is argued that structural changes in the labor market contribute to an overprediction of price and wage inflation.

Series:

Working Paper No. 95/41

Subject:

English

Publication Date:

April 1, 1995

ISBN/ISSN:

9781451846041/1018-5941

Stock No:

WPIEA0411995

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

28

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