How Fast Wages Adjust to Prices: A Multi Country Analysis
Mohsen Bahmani-Oskooee () and
Massoumeh Hajilee ()
Additional contact information
Massoumeh Hajilee: University of Houston-Victoria
Economics Bulletin, 2011, vol. 31, issue 3, 2404-2413
The adjustment of nominal wages to inflation has implications on the labor market as well as on other areas in economics. In this paper, we employ the Blanchard and Katz (1997, 1999) model of nominal wage determination and try to estimate the adjustment speed. By using the bounds testing approach for cointegration and error-correction modeling we distinguish the short run from the long run. The model is estimated for 29 countries using annual data over the period 1975-2006. We find that inflation, unemployment rate, and labor productivity all have short-run and long-run effects for the majority of the countries. However, nominal wages adjust to inflation fully in 11 of the 29 counties.
Keywords: Wage- Price Philips curve; adjustment speed; Bounds Testing. (search for similar items in EconPapers)
JEL-codes: E0 E2 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-11-00013
Access Statistics for this article
More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().