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What caused the post-pandemic inflation in Italy? An application of Bernanke and Blanchard (2023)

Author

Listed:
  • Massimiliano Pisani

    (Bank of Italy)

  • Alex Tagliabracci

    (Bank of Italy)

Abstract

We estimate using Italian data the model proposed by Bernanke and Blanchard (2023) to explain the dynamics of prices and wages in the post-pandemic period in Italy. The empirical analysis shows that the model performs well in capturing inflation developments, which were mainly driven by the energy and food components, but the fit of the wage dynamics is not entirely satisfactory as the specific features of the Italian labor market are not adequately described by the econometric specification considered.

Suggested Citation

  • Massimiliano Pisani & Alex Tagliabracci, 2024. "What caused the post-pandemic inflation in Italy? An application of Bernanke and Blanchard (2023)," Questioni di Economia e Finanza (Occasional Papers) 851, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_851_24
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2024-0851/QEF_851_24.pdf
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    References listed on IDEAS

    as
    1. Olivier J. Blanchard & Marianna Riggi, 2013. "WHY ARE THE 2000s SO DIFFERENT FROM THE 1970s? A STRUCTURAL INTERPRETATION OF CHANGES IN THE MACROECONOMIC EFFECTS OF OIL PRICES," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1032-1052, October.
    2. Corsello, Francesco & Neri, Stefano & Tagliabracci, Alex, 2021. "Anchored or de-anchored? That is the question," European Journal of Political Economy, Elsevier, vol. 69(C).
    3. Gregory de Walque & Thomas Lejeune, 2024. "What caused the post-pandemic era inflation in Belgium? Replication of the Bernanke-Blanchard model for Belgium," Working Paper Research 447, National Bank of Belgium.
    4. Cristina Conflitti and Matteo Luciani, 2019. "Oil Price Pass-through into Core Inflation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 6).
    5. Tiziano Ropele & Alex Tagliabracci, 2024. "Perceived economic effects of the war in Ukraine: survey-based evidence from Italian firms," Applied Economics Letters, Taylor & Francis Journals, vol. 31(4), pages 275-280, February.
    6. Cristina Conflitti & Matteo Luciani, 2019. "Oil Price Pass-through into Core Inflation," The Energy Journal, , vol. 40(6), pages 221-248, November.
    7. Koester, Gerrit & Grapow, Helen, 2021. "The prevalence of private sector wage indexation in the euro area and its potential role for the impact of inflation on wages," Economic Bulletin Boxes, European Central Bank, vol. 7.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    inflation; wages; inflation expectations; energy; COVID-19;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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