engleski

Consumer price index and nominal earnings index in crisis

This paper analyses the trends of consumer price index and nominal net earnings index in Croatia during the period of ten years (1998-2007). It is expected that these two indices have the same trend because earnings should reflect the changes in price levels. In this context the paper explains some theoretical determinants of employee earnings. The empirical part of the paper explores the correlation among consumer price index and nominal net earnings index based on the data provided by Central Bureau of Statistics. A model to describe the relationship among consumer price index and nominal earnings index is proposed and tested. The model states that the rise of consumer price index for 1% leads to an increase of nominal net earning index of 0, 29%. Special attention is given to trends of consumer price index and nominal net earnings in the period of crisis and its potential impact on overall global economy in Croatia.

employee earnings; consumer price index; nominal earnings index; crisis

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