In this paper, local projections are used to explore the unemployment-price inflation relationship in a more generalized, empirical fashion. We find that inflation’s reaction to changes in the unemployment rate varies across states of the economy, with timing as the primary difference. In low-unemployment environments, inflation reacts immediately and persistently. In high-unemployment environments, the same reaction manifests after a 1-year lag. We then use industry-level data and a two-stage feasible generalized least squares method to explore the factors that drive this relationship. We find that increased reliance on labor and intermediate inputs adds to the inflationary pressures of low unemployment, while increased market concentration (among others) dampens this effect.

在本文中，使用局部预测以更普遍的，经验的方式探索失业率与价格的通胀关系。我们发现，通货膨胀对失业率变化的反应因经济状况而异，以时机为主要差异。在失业率低的环境中，通货膨胀会立即且持续地做出反应。在高失业率的环境中，滞后1年后也会出现相同的反应。然后，我们使用行业水平的数据和两阶段可行的广义最小二乘法来探索驱动这种关系的因素。我们发现，越来越依赖劳动力和中间投入会增加低失业率的通货膨胀压力，而市场集中度的提高（除其他外）会减弱这种影响。