USING WAVELETS IN ECONOMICS. AN APPLICATION ON THE ANALYSIS OF WAGE-PRICE RELATION

Vasile-Aurel Caus, Daniel Badulescu and Mircea Cristian Gherman ()
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Vasile-Aurel Caus: Department of Mathematics, University of Oradea, Oradea, Romania
Mircea Cristian Gherman: Technical University of Cluj-Napoca, Romania

Oradea Journal of Business and Economics, 2017, vol. 2, issue 1, 32-42

Abstract: In the last decades, more and more approaches of economic issues have used mathematical tools, and among the most recent ones, spectral and wavelet methods are to be distinguished. If in the case of spectral analysis the approaches and results are sufficiently clear, while the use of wavelet decomposition, especially in the analysis of time series, is not fully valorized. The purpose of this paper is to emphasize how these methods are useful for time series analysis. After theoretical considerations on Fourier transforms versus wavelet transforms, we have presented the methodology we have used and the results obtained by using wavelets in the analysis of wage-price relation, based on some empirical data. The data we have used is concerning the Romanian economy - the inflation and the average nominal wage denominated in US dollars, between January 1991 and May 2016, highlighting that the relation between nominal salary and prices can be revealed more accurately by use of wavelets.

Keywords: wage-price spiral; wavelet transforms; Fourier transforms; spectral analysis (search for similar items in EconPapers)
JEL-codes: C02 C32 E31 (search for similar items in EconPapers)
Date: 2017
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