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Cointegration and Structure in Norwegian Wage–Price Dynamics

Marit Gjelsvik (), Ragnar Nymoen () and Victoria Sparrman ()
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Marit Gjelsvik: Statistics Norway, Research Department, Postboks 2633 St.Hanshaugen, NO-0131 Oslo, Norway
Ragnar Nymoen: Department of Economics, University of Oslo, Postboks 1095 Blindern, NO-0317 Oslo, Norway
Victoria Sparrman: Statistics Norway, Research Department, Postboks 2633 St.Hanshaugen, NO-0131 Oslo, Norway

Econometrics, 2020, vol. 8, issue 3, 1-15

Abstract: Wage coordination plays an important role in macroeconomic stabilization. Pattern wage bargaining systems have been common in Europe, but in different forms, and with different degrees of success in terms of actual coordination reached. We focus on wage formation in Norway, a small open economy, where it is custom to regard the manufacturing industry as the wage leader. We estimate a model of wage formation in manufacturing and in two other sectors. Deciding cointegration rank is an important step in the analysis, economically as well statistically. In combination with simultaneous equation modelling, the cointegration analysis provides evidence that collective wage negotiations in manufacturing have defined wage norms for the rest of the economy over the period 1980(1)–2014(4).

Keywords: cointegration; error-correcting adjustment; estimation and hypothesis testing in cointegrated models; rent-sharing in wage formation; pattern wage bargaining; inflation targeting; small open economy wage policies; inflation targeting; macroeconomic fluctuations and transmission mechanisms (search for similar items in EconPapers)
JEL-codes: B23 C C00 C01 C1 C2 C3 C4 C5 C8 (search for similar items in EconPapers)
Date: 2020
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