Testing for stationarity in large panels with cross-dependence, and US evidence on unit labor cost

2010 ◽  
Vol 37 (8) ◽  
pp. 1381-1397 ◽  
Author(s):  
Matei Demetrescu ◽  
Uwe Hassler ◽  
Adina I. Tarcolea
Keyword(s):  
Labor Cost ◽  
Unit Labor Cost ◽  
Large Panels

scholarly journals Inflation and Unit Labor Cost

2012 ◽  
Vol 44 ◽  
pp. 111-149 ◽  
Author(s):  
ROBERT G. KING ◽  
MARK W. WATSON
Keyword(s):  
Labor Cost ◽  
Unit Labor Cost

scholarly journals Versailles Redux? Eurozone Competitiveness in a Dynamic Balassa-Samuelson-Penn Framework

2014 ◽  
Vol 5 (2) ◽  
Author(s):  
Kevin Stahler ◽  
Arvind Subramanian
Keyword(s):  
Exchange Rate ◽  
International Comparison ◽  
Labor Cost ◽  
Prima Facie ◽  
Nominal Exchange Rate ◽  
Strongly Correlated ◽  
Unit Labor Cost ◽  
Advanced Economies ◽  
Exchange Rate Changes ◽  
Special Circumstances

AbstractPrima facie, competitiveness adjustments in the eurozone, based on unit labor cost developments, appear sensible and in line with what the economic analyst might have predicted and the economic doctor might have ordered. But a broader and arguably better – Balassa-Samuelson-Penn (BSP) – framework for analyzing these adjustments paints a very different picture. Taking advantage of the newly released PPP-based estimates of the International Comparison Program (2011), we identify a causal BSP relationship. We apply this framework to computing more appropriate measures of real competitiveness changes in Europe and other advanced economies in the aftermath of the recent global crises. There has been a deterioration, not improvement, in competitiveness in the periphery countries between 2007 and 2013. Second, the pattern of adjustment within the eurozone has been dramatically perverse, with Germany having improved competitiveness by 9% and with Greece’s having deteriorated by 9%. Third, real competitiveness changes are strongly correlated with nominal exchange rate changes, which suggests the importance of having a flexible (and preferably independent) currency for effecting external adjustments. Fourth, internal devaluation – defined as real competitiveness improvements in excess of nominal exchange rate changes – is possible but seems limited in scope and magnitude. Our results are robust to adjusting the BSP framework to take account of the special circumstances of countries experiencing unemployment. Even if we ignore the BSP effect, the broad pattern of limited and lopsided adjustment in the eurozone remains.

To converge or not converge: unit labor cost inflation in the Euro area

2011 ◽  
Vol 44 (2) ◽  
pp. 455-467 ◽  
Author(s):  
Helmut Herwartz ◽  
Florian Siedenburg
Keyword(s):  
Euro Area ◽  
Labor Cost ◽  
Unit Labor Cost

scholarly journals Evaluating Microfoundations for Aggregate Price Rigidities: Evidence from Matched Firm-Level Data on Product Prices and Unit Labor Cost

2012 ◽  
Vol 102 (4) ◽  
pp. 1571-1595 ◽  
Author(s):  
Mikael Carlsson ◽  
Oskar Nordström Skans
Keyword(s):  
Marginal Cost ◽  
Labor Cost ◽  
Unit Labor Cost ◽  
Firm Level ◽  
Price Adjustments ◽  
Level Data ◽  
Price Rigidities ◽  
Key Driver ◽  
Pass Through ◽  
Matched Data

Using matched data on product-level prices and the producing firm's unit labor cost, we find a moderate pass-through of current idiosyncratic marginal-cost changes. Also, the response does not vary across firms facing very different idiosyncratic shock variances, but identical aggregate conditions. These results do not fit the predictions of Mackowiak and Wiederholt (2009). Neither do firms react strongly to predictable marginal-cost changes, as expected from Mankiw and Reis (2002). We find that firms consider both current and expected future marginal cost when setting prices. This points toward impediments to continuous price adjustments as a key driver of monetary non-neutrality.

Sign in / Sign up

Export Citation Format

Share Document