The “price markup” hypothesis says that prices are marked up over productivity-adjusted wages, implying that prices and wages must be correlated in the long run and that short-run movements in wages help predict short-run movements in prices. The empirical evidence reported here indicates...

Two popular inflation indicators commonly monitored by analysts are the pace of real economic activity and the rate of growth of labor costs. It is widely believed that if the economy grows at a rate above its long-run potential or, if the rate of growth of labor costs exceeds the trend rate in...