Wage Formation And Employment In A Cointegrated VAR Model  

Oleh:

Petursson, Thorarinn G. ; Slok, Torsten

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Econometrics Journal vol. 4 no. 2 (2001), page 171-190.
Topik: Wage bargaining; Monopolistic competition; Employment; Over-identifying cointegrating restrictions; VAR models.
Fulltext: 171.pdf (136.53KB)

Isi artikel

This paper uses a general equilibrium, monopolistic competition model of wage bargaining between trade unions and firms to derive two steady state relations which are estimated within a cointegrated VAR framework using quarterly Danish data. The first cointegrating relation is the marginal productivity condition for labour, derived from profit maximization of firms who face a downward sloping demand curve for their product. The second cointegrating relation is a real wage relation, derived from the bargaining between trade unions and firms over wages, in the right-to-manage manner. The theoretical model is not rejected and the model displays parameter constancy throughout the estimation period and is able to forecast out-of-sample.

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