Real Wages and the Role of Distributional Conflict in the German Hyperinflation and Stabilization

Richard Burdekin and Paul Burkett
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Paul Burkett: Indiana State University

Chapter 5 in Distributional Conflict and Inflation, 1996, pp 105-127 from Palgrave Macmillan

Abstract: Abstract Chapter 4 suggests that money wage growth, as generated by capital-labor conflict over income shares, played a significant role in augmenting fiscal pressures on the money supply in post-World War I Germany. The present chapter further develops the conflict analysis of the German hyperinflation in two ways. First, in order to more closely analyze the short-run determination of conflict outcomes in this episode, we estimate a conflict model of real wage determination under hyperinflationary conditions using monthly data for April 1920 through August 1923. Our analytical framework treats the current real wage as the outcome of distributional conflict between the money wage demands of labor and price increases by firms. While both of these conflict variables respond positively to expected inflation, the model also incorporates the negative effect of unemployment on the bargaining power of labor.

Keywords: Bargaining Power; Real Wage; Money Supply; Nominal Wage; Money Wage (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-37173-6_6

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DOI: 10.1057/9780230371736_6

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