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Cyclical or countercyclical nature of prices and wages in the euro area

Author

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  • Misztal Piotr

    (Department of Economics and Finance, Faculty of Law and Social Sciences, Jan Kochanowski University, Kielce, Poland)

Abstract

Aim/purpose – The aim of the undertaken research is to analyse the interdependencies between cyclical changes in consumer prices, production prices, wages and production in the euro area in the period Q1.2010-Q3.2017. Methodology – A literature review in the field of macroeconomics and international finance and statistical and econometric methods were used in this study. Findings – The hypothesis that prices on the market follow the changes in the business cycle is a central aspect in research on business cycles. The results of the conducted research suggest no occurrence of the cyclical phenomenon of consumer prices, producer prices and wages in the examined period of time. Research implications – The findings of the research are extremely important especially from the European Central Bank monetary policy point of view. The lack of cyclical changes in inflation, production prices and wages can lead to asymmetric monetary policy reaction to fluctuations in economic activity. Originality – To date, no comprehensive research has been conducted into the phenomenon of price and wage cyclicality in the euro area. Therefore, this research fills the existing gap in this area, constituting a significant contribution to empirical research in the field of price cyclicality.

Suggested Citation

  • Misztal Piotr, 2020. "Cyclical or countercyclical nature of prices and wages in the euro area," Journal of Economics and Management, Sciendo, vol. 41(3), pages 25-46, September.
    • Handle: RePEc:vrs:jecman:v:41:y:2020:i:3:p:25-46:n:2
    DOI: 10.22367/jem.2020.41.02
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    References listed on IDEAS

    as
    1. Finn E. Kydland & Edward C. Prescott, 1990. "Business cycles: real facts and a monetary myth," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 14(Spr), pages 3-18.
    2. Cooley, Thomas F. & Ohanian, Lee E., 1991. "The cyclical behavior of prices," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 25-60, August.
    3. Lucas, Robert E., 1977. "Understanding business cycles," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 7-29, January.
    4. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    prices; wages; business cycle;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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