Template-type: ReDIF-Paper 1.0
Author-Name: Jessica Leutert
Author-Name-First: Jessica
Author-Name-Last: Leutert
Author-Person: ple953
Author-Name: Rolf Scheufele
Author-Name-First: Rolf
Author-Name-Last: Scheufele
Author-Person: psc357
Author-Name: Selina Schön
Author-Name-First: Selina
Author-Name-Last: Schön
Title: Wage-price pass-through in Switzerland
Abstract: We analyse the historical relationship between consumer prices and wages in Switzerland. Our results show that, between 1980 and 2019, the pass-through from prices to wages was substantial. At the same time, nominal wage increases only had a modest effect on prices. Other factors – such as imported inflation, inflation expectations and economic slack – clearly dominate wages in explaining price movements in Switzerland. Second-round effects of inflation, in turn, are mainly explained by inflation expectations. Our results suggest that the pass-through from wages to prices could be higher in an environment of elevated inflation. However, even in the 1980s and 1990s, the pass-through was only modest. It follows that periods of simultaneously high inflation and high wage growth were not the result of a wage-price spiral. Instead, the long-term comovement of the two variables can mostly be explained by common drivers (e.g., inflation expectations, economic slack) and by the gradual adjustment of wages to price.

Length: 29 pages
Creation-Date: 2025
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_06
File-Format: text/html
Number: 2025-06
Classification-JEL: E24, E31
Keywords: Inflation, Labour costs, Pass-through, Switzerland, SVECM, Granger causality
Handle: RePEc:snb:snbwpa:2025-06