Inflationary dynamics of labour market activity: Evidence from the Czech Republic

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00025950%3A_____%2F24%3AN0000049" target="_blank" >RIV/00025950:_____/24:N0000049 - isvavai.cz</a>

Result on the web

<a href="https://www.sciencedirect.com/science/article/pii/S0313592624002996?via%3Dihub" target="_blank" >https://www.sciencedirect.com/science/article/pii/S0313592624002996?via%3Dihub</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.eap.2024.10.045" target="_blank" >10.1016/j.eap.2024.10.045</a>

Result language

angličtina

Original language name

Inflationary dynamics of labour market activity: Evidence from the Czech Republic

Original language description

This paper provides an in-depth investigation into the intricacy of inflation dynamics in the Czech Republic, with particular emphasis on the influence exerted by labor market activity. The research employed principal component analysis and the local projections methodology proposed by Jorda (2005) in the context of the Phillips curve framework, followed by the extension of the analysis via the introduction of a nuanced state dependence dimension that recognizes that the impact of labor market activity on inflation may be contingent upon the broader economic situation. Our findings revealed the statistically significant impact of labor market activity on inflation. Specifically, a one standard deviation increase in the labor market activity component leads to an accumulated increase in inflation of approximately 3 percentage points over a three-year horizon. Our non-linear model uncovered the pivotal interaction between state dependence and the impact on inflation. The findings revealed that during expansionary periods, labor market pressures can be effectively managed for a limited period, albeit with a slight escalation in prices. However, over an extended period, the labor market is susceptible to encountering constraints that lead to markedly higher inflation rates - almost twice as high as those observed during recessionary periods. We subjected our benchmark results to extensive robustness verification.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50401 - Sociology

Project

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Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2024

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Economic Analysis and Policy

ISSN

0313-5926

e-ISSN

2204-2296

Volume of the periodical

84

Issue of the periodical within the volume

nečísl.

Country of publishing house

NL - THE KINGDOM OF THE NETHERLANDS

Number of pages

30

Pages from-to

1309–1327

UT code for WoS article

001342707000001

EID of the result in the Scopus database

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