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

Karl Whelan (karl.whelan@ucd.ie)

Open Access publications from School of Economics, University College Dublin

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 one. 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: Phillips curve; Autoregression (Statistics); Inflation (Finance)--Mathematical models (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 1997-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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http://hdl.handle.net/10197/246 First version, 1997 (application/pdf)

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