Wage curve vs. Phillips curve: are there macroeconomic implications?

Karl Whelan (karl.whelan@ucd.ie)

No 1997-51, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The standard derivation of the accelerationist Phillips curve relates expected real wage inflation to the unemployment rate and invokes a constant price markup and adaptive expectations to generate the accelerationist price inflation formula. Blanchflower and Oswald (1994) argue that microeconomic evidence of a low autoregression coefficient in real wage regressions invalidates the macroeconomic Phillips curve. This conclusion has been disputed by a number of authors on the grounds that the true autoregression coefficient is close to 1. This paper shows that given the assumption of a constant price markup, micro-level real wage dynamics have no observable implications for macro data on wage and price inflation.

Keywords: Wages; Macroeconomics (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Wage Curve vs. Phillips Curve: are there macroeconomic implications? (1997)
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