Hiring and Investment Frictions Drive Inflation Dynamics, Impacting Marginal Costs
The article shows that difficulties in hiring and investing affect inflation. These challenges impact how much it costs for companies to produce goods, which then influences inflation rates. By studying US data, the researchers found that hiring and investment issues play a big role in explaining inflation changes. Hiring problems contribute to about half of cost variations, while investment issues and wage negotiations also play a part. The study reveals that these frictions are important factors in understanding inflation dynamics.