IMF Working Papers

Exchange Rate Movements and Inflation Performance: The Case of Italy

By Robert Ford, Thomas Krueger

April 1, 1995

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Format: Chicago

Robert Ford, and Thomas Krueger. Exchange Rate Movements and Inflation Performance: The Case of Italy, (USA: International Monetary Fund, 1995) accessed December 21, 2024
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.

Subject: Consumer prices, Export prices, Import prices, Inflation, Labor, Labor markets, Prices, Wages

Keywords: B. price, Competitor price, Consumer prices, Europe, Export prices, Goods price, Import price, Import price increase, Import prices, Inflation, Labor cost indicator, Labor market, Oil price change, Oil price effect, Output gap, Partner country import price, Price shock, Price variable, Productivity, Traded goods price, Wage-price spiral, Wages, WP

Publication Details

  • Pages:

    28

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1995/041

  • Stock No:

    WPIEA0411995

  • ISBN:

    9781451846041

  • ISSN:

    1018-5941