Inflation in OECD Countries: An Empirical Assessment of a Structuralist Theory of Inflation

This paper is an empirical examination of the structuralist theory of inflation. We extend the previous literature by assembling a dataset of 21 OECD countries over the past four decades and thoroughly testing the robustness of our results with a variety of control variables and econometrics techniques including panel ARDL. We find a noteworthy connection between inflation and the structuralist variables, especially the labour share, suggesting that the disinflation seen over the past four decades is primarily the result of less pronounced social conflict acting as price-propagating mechanisms, reflected in a decreasing labour share.