In this paper I use a new keynesian model with nominal price rigidity to analyze the behaviour of the Swiss CPI. In the model nominal price rigidity arises because prices are costly to change for the firms (menu costs). The model shows that, when a supply shock or a sector-related demand shock...

We construct a quarterly time series for nominal hourly wages and unit labour costs from 1975 onwards and investigate the empirical link between wages and CPI inflation in order to identify causality effects and assess the relevance of wages as an indicator for short-run price changes. We find...

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