Macroeconomic stability or cycles? The role of the wage-price spiral

Dag Kolsrud and Ragnar Nymoen ()

Discussion Papers from Statistics Norway, Research Department

Abstract: We derive aggregate supply (AS) relationships for an intermediate-run macro model.The wage-price spiral provides the conceptual framework for a synthesis of different contesting theoretical and empirical perspectives on the AS curve: the Phillips curve model (PCM) and the wage-price equilibrium correction model (WPECM). The generalized AS curve is grafted into a small macro model. We analyze stability conditions, steady states, and dynamic solutions, using a combination of algebra and simulations. The specification of the AS curve, as a PCM or a WPECM, is shown to be important for all aspects of the model's solution, but within each model also the detailed parameterization is of qualitative importance. For example, endogenous cyclical fuctuations are typical for both nominal and real variables, e.g. inflation and unemployment.

Keywords: AS-AD; cycles; dynamics; equilibrium correction; macroeconomics; nominal rigidity; Phillips curve; unemployment; wage-price spiral. (search for similar items in EconPapers)
JEL-codes: E24 E30 J50 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.ssb.no/a/publikasjoner/pdf/DP/dp625.pdf (application/pdf)

Related works:
Journal Article: Macroeconomic Stability or Cycles? The Role of the Wage-Price Spiral (2014)
Working Paper: Macroeconomic Stability or Cycles? The Role of the Wage-price Spiral (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:625

Access Statistics for this paper

More papers in Discussion Papers from Statistics Norway, Research Department P.O.Box 8131 Dep, N-0033 Oslo, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by L Maasø ().