Unemployment and Inflation in Ireland: 1926-2012

CFS Working Paper No. 514

34 Pages Posted: 22 Sep 2015

See all articles by Stefan Gerlach

Stefan Gerlach

Central Bank of Ireland; Centre for Economic Policy Research (CEPR)

Reamonn Lydon

Independent

Rebecca Stuart

Central Bank of Ireland

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2015

Abstract

Since the 1970s, the overarching view in the literature has been that a Phillips curve relationship did not exist in Ireland prior to the 1979 exchange rate break with Sterling. It was argued that, as a small open economy, prices were determined externally. To test this relationship, we study the determination of inflation between 1926 and 2012, a longer sample period than any previously used. We find that the difference between unemployment and the NAIRU is a significant determinant of inflation both in the full sample and in the subsamples spanning the periods before and after the Sterling parity link.

Keywords: Ireland, historical statistics, inflation, unemployment, import prices

JEL Classification: E3, E4, N14

Suggested Citation

Gerlach, Stefan and Lydon, Reamonn P and Stuart, Rebecca, Unemployment and Inflation in Ireland: 1926-2012 (July 30, 2015). CFS Working Paper No. 514. Available at SSRN: https://ssrn.com/abstract=2663343 or http://dx.doi.org/10.2139/ssrn.2663343

Stefan Gerlach (Contact Author)

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Reamonn P Lydon

Independent ( email )

No Address Available

Rebecca Stuart

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

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