Why Has Inflation in the United States Remained So Low? Reassessing the Importance of Labor Costs and the Price of Imports

November 1, 1999

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 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.

Subject: Import prices, Inflation, Labor, Labor costs, Labor share, Prices

Keywords: consumer price inflation, cost, Import prices, Inflation, inflation puzzle, labor cost, labor costs, Labor share, Phillips curve, price, proxying inflation expectation, salary, salary component, wage inflation, wage Phillips curve, WP

Pages:
23
Volume:
1999
DOI:
https://doi.org/10.5089/9781451856873.001
Issue:
149
Series:
Working Paper No. 1999/149
Stock No:
WPIEA1491999
ISBN:
9781451856873
ISSN:
1018-5941

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