Wage and Inflation Dynamics in Denmark

July 19, 2023

Preview Citation

Format: Chicago

Raju Huidrom. Wage and Inflation Dynamics in Denmark, (USA: International Monetary Fund, 2023) accessed November 21, 2024

Summary

Nominal wage growth in Denmark has so far been modest and outpaced by high inflation, putting real wage growth in negative territory. Amid still-tight labor markets, this has raised concerns about wage pressures going forward and the eventual impact on inflation. The analysis suggests that wage formation in Denmark has historically been partly backward-looking, and economic slack also has played a role. Given these, high inflation realized thus far and the tightness in the labor market implies that wage pressures are expected to remain elevated in the near term. Some of these wage pressures, in turn, are expected to be passed on to core inflation, sustaining high inflation. Thus, determined policies to fight inflation are important.

Subject: Inflation, International organization, Labor, Labor markets, Monetary policy, Prices, Real wages, Wage dynamics, Wages

Keywords: Europe, IMF staff calculation, Inflation, Inflation dynamics, Inflation expectation, Labor markets, Nominal wage growth, Passthrough, Real wages, Wage dynamics, Wage pressure, Wages

Publication Details

Pages:

16
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2023/052
Stock No:

SIPEA2023052
ISBN:

9798400251924
ISSN:

2958-7875

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