DP10567 Unemployment and Inflation in Ireland: 1926-2012
|Author(s):||Stefan Gerlach, Reamonn Lydon, Rebecca Stuart|
|Publication Date:||May 2015|
|Keyword(s):||historical statistics, import prices, inflation, Ireland, unemployment|
|JEL(s):||E3, E4, N14|
|Programme Areas:||International Macroeconomics, Economic History|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=10567|
We study the determination of Irish inflation between 1926 and 2012. The difference between unemployment and the NAIRU is a significant determinant of inflation in a simple backward-looking Phillips Curve that incorporates import prices. While there is a break in 1979-80, when the link to Sterling was abandoned, this effect is present in the full sample and in the subsamples spanning 1926-1979 and 1980-2012. The econometric model assumes that the NAIRU follows a random walk.