Abstract
The nature of the cause-and-effect relationship between inflation and wages in Russia in 2003–2014 has been analyzed. The author has focused on defining the reliability of cost-push inflation theory and demand inflation theory based on Russian data using econometric methods (the Granger causality test and vector error-correction model). The stabilit y of the modeling results (for the purpose of excluding structural changes under the conditions of varying of the principles of Bank of Russia’s monetary policy during the transition to inflation targeting) is checked using the Gregory–Hansen method. In the article, the results are compared to the similar studies carried out for developed countries and countries with developing markets.
Similar content being viewed by others
References
Y. P. Mehra, “Wage-price dynamics: Are they consistent with cost push?,” Econ. Q., Fed. Reserve Bank of Richmond 86, 27–43 (2000).
A. A. Abdel-Aziz and H. Fares, “A Granger causality test between wage-inflation and price inflation: A case study on the Egyptian economy,” Interstate J., Aug. (2010), p. 14.
K. M. Emery and C.-P. Chang, “Do wages help predict inflation?,” in Federal Reserve Bank of Dallas, Economic Reviews of First Quarter (1996), pp. 2–9.
G. D. Hess and M. E. Schweitzer, “Does wage inflation cause price inflation?,” Fed. Reserve Bank Cleveland, Policy Discuss. Pap., No. 10, 14 (2000).
L. Hu and M. Toussaint-Comeau, “Do labor market activities help predict inflation?,” Econ. Perspect., 2Q, 52–63 (2010).
K. H. Ghali, “Wage growth and the inflation process: A multivariate co-integration analysis,” J. Money Credit Bank. 31 (3), pp. 417–431 (1999).
Y. P. Mehra, “Wage growth and the price level,” Fed. Reserve Bank Richmond, Econ. Rev., No. 79 (4), pp. 35–52 (1993).
M. Jonsson and S. Palmqvist, “Do higher wages cause inflation?” Sveriges Riksbank Work. Pap. Ser., No. 159, 43 (2004).
S. Lemos, “The effect of the minimum wage on prices,” Univ. Leicester, Work. Pap., No. 4/7, 11 (2004).
D. Josheski and S. Bardarova, “Causal relation between wages and prices in R. Macedonia: VECM Analysis,” MPRA Pap., No. 48179, 24 (2013).
J. M. Julio and A. Cobo, “The relationship between wages and prices in Colombia,” MPRA Pap., No. 52676, 19 (2000).
R. F. Engle, D. F. Hendry, and J.-F. Richard, “Exogeneity,” Econometrica 51 (2), 277–304 (1983).
Rosstat. http://wwwgksru.
E. S. Vakulenko and E. T. Gurvich, “Modeling of mechanisms of the Russian labor market,” Probl. Rynka Tr., No. 8, 33 (2014).
M. A. Ivanova, “The relationship of wages in the private and public sectors,” Vopr. Ekon., No. 7, 120–141 (2015).
A. W. Gregory and B. E. Hansen, “Test for cointegration in models with regime and trend shift,” Bull. Econ. Stat., 58, 555–560 (1996).
OECD. http://statsoecdorg/.
C. A. Holz and A. Mehrotra, “Wage and price dynamics in large emerging economy: The case of China,” BIS Work. Pap., No. 409, 18 (2013).
L.-G. Liu and A. Tsang, “Exchange rate pass-through to domestic inflation in Hong Kong,” Hong Kong Monetary Auth., Work. Pap., No. 2, p. 23 (2008).
A. Yu. Oshchepkov, “The impact of the minimum wage on informal employment,” Probl. Rynka Tr., WP3, Vyssh. Shk. Ekon., No. 7, 49 (2013).
A. Lukiyanova, “Effects of minimum wages on the Russian wage distribution,” in National Research University Higher School of Economics, Basic Research Program. Working Papers. Series: Economics (WP BRP, 2011), p. 33.
Neumark et al., “Minimum wage effects throughout the wage distribution,” J. Hum. Resour. 39 (2), 425–450 (2004).
Author information
Authors and Affiliations
Corresponding author
Additional information
Original Russian Text © M.A. Ivanova, 2016.
Rights and permissions
About this article
Cite this article
Ivanova, M.A. Analysis of the nature of cause-and-effect relationship between inflation and wage in Russia. Stud. Russ. Econ. Dev. 27, 575–584 (2016). https://doi.org/10.1134/S1075700716050051
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1134/S1075700716050051