Link between US labour costs and inflation has weakened – ECB paper

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Labour costs’ impact on US inflation has weakened significantly in recent decades, with important policy implications, a working paper published by the European Central Bank finds.

In The changing link between labour cost and price inflation in the United States, Elena Bobeica, Matteo Ciccarelli and Isabel Vansteenkiste examine the relationship between US employment costs and inflation.

The authors analyse data from 1960 to 2018 using a parsimonious vector auto-regressive model. The link

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