Wage Contracting in the Macroeconomy

Donald Dutkowsky () and H Sonmez Atesoglu

Journal of Money, Credit and Banking, 1993, vol. 25, issue 1, 62-78

Abstract: This paper investigates wage contracting in the macroeconomy. The authors derive an orthogonality condition to test for effects of long-term contracting based upon the generalized-method-of-moments estimator. To examine the viability of wage contracting within the macroeconomic structure, the authors specify and estimate a Fischer-type model. Tests for multiperiod, nonindexed contracts in determining the aggregate nominal wage rate generate mixed results. While the test for overidentifying restricti ons suggests a weak effect, findings from an orthogonality test indicate significance. The study provides support for a New Keynesian macroeconomic model and some evidence for wage inflexibility due to contracting. Copyright 1993 by Ohio State University Press.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:25:y:1993:i:1:p:62-78

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