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The Contribution of Profits and Labour Costs to Inflation in Sweden in the Short and Long Run

Cataldi, Celina LU (2023) EOSK12 20231
Department of Economic History
Abstract
2022 saw a significant increase in global inflation that eroded the purchasing power of many households. Contrastingly, many firms saw an increase in profitability against public dissatisfaction. Stemming from this conflicting development, more research has attempted to test a possible association between profits and inflation. However, much of this research has focused on the U.S. This thesis is focused on Sweden and uses a descriptive statistical method to measure inflation based on movements in the GDP deflator over time. Using Swedish national accounts data, the GDP deflator is broken down into unit profits and unit labour costs to examine their impact on inflationary pressures in the short run between 2019-2022, as well as the long... (More)
2022 saw a significant increase in global inflation that eroded the purchasing power of many households. Contrastingly, many firms saw an increase in profitability against public dissatisfaction. Stemming from this conflicting development, more research has attempted to test a possible association between profits and inflation. However, much of this research has focused on the U.S. This thesis is focused on Sweden and uses a descriptive statistical method to measure inflation based on movements in the GDP deflator over time. Using Swedish national accounts data, the GDP deflator is broken down into unit profits and unit labour costs to examine their impact on inflationary pressures in the short run between 2019-2022, as well as the long run between 1994-2022. Comparisons are also made to the European Union and the Nordic Countries. The main findings confirm previous research and point to a strong contribution of unit profits to inflationary pressures from 2019-2022. However, in the long run, the impact of each unit cost on the outlook of inflation varies. The findings of this thesis are important by pointing to a revaluation of dominating explanations that usually ascribe labour costs (wages) as the main driver of inflation. (Less)
Please use this url to cite or link to this publication:
author
Cataldi, Celina LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
language
English
id
9133731
date added to LUP
2023-08-14 11:26:21
date last changed
2023-08-14 11:26:21
@misc{9133731,
  abstract     = {{2022 saw a significant increase in global inflation that eroded the purchasing power of many households. Contrastingly, many firms saw an increase in profitability against public dissatisfaction. Stemming from this conflicting development, more research has attempted to test a possible association between profits and inflation. However, much of this research has focused on the U.S. This thesis is focused on Sweden and uses a descriptive statistical method to measure inflation based on movements in the GDP deflator over time. Using Swedish national accounts data, the GDP deflator is broken down into unit profits and unit labour costs to examine their impact on inflationary pressures in the short run between 2019-2022, as well as the long run between 1994-2022. Comparisons are also made to the European Union and the Nordic Countries. The main findings confirm previous research and point to a strong contribution of unit profits to inflationary pressures from 2019-2022. However, in the long run, the impact of each unit cost on the outlook of inflation varies. The findings of this thesis are important by pointing to a revaluation of dominating explanations that usually ascribe labour costs (wages) as the main driver of inflation.}},
  author       = {{Cataldi, Celina}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Contribution of Profits and Labour Costs to Inflation in Sweden in the Short and Long Run}},
  year         = {{2023}},
}