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- Title
A Phillips curve interpretation of error-correction models of the wage and price dynamics.
- Authors
Harck, S&3x00F8;ren
- Abstract
This paper presents a model of employment, distribution and inflation in which a modern error correction specification of the nominal wage and price dynamics (referring to claims on income by workers and firms) occupies a prominent role. It is brought out, explicitly, how this rather typical error-correction setting, which actually seems to capture the wage and price dynamics of many large-scale econometric models quite well, is fully compatible with the notion of an old-fashioned Phillips curve with finite slope. It is shown how the steady-state impact of various shocks to the model can be profitably conceived of and interpreted in terms of (and to some extent even calculated by means of) this long-run Phillips curve.
- Subjects
EFFECT of inflation on income; PHILLIPS curve; LORENZ curve; DEMAND function; ECONOMETRIC models; ECONOMETRICS; WAGES; RATIONAL expectations (Economic theory); INCOME inequality
- Publication
Cambridge Journal of Economics, 2009, Vol 33, Issue 1, p95
- ISSN
0309-166X
- Publication type
Article
- DOI
10.1093/cje/ben018