Relative Prices, Real Wages, and Macroeconomic Policies: Some Evidence from Manufacturing in Japan and the United Kingdom

Abstract:     
The effects of the oil price shocks of the 1970s were critically contingent on the domestic arrangements that determined the incidence of the shocks--specifically whether labor income or capital income bore the brunt. This differed between the two shocks in some countries and differed between countries. This paper focuses on two cases--Japan and the UK--on the structure of production, and on the incidence of the shocks to explain the very different macroeconomic effects of the oil price shocks.

Keywords: Relative Prices, Real Wages, Macroeconomic Policies

JEL Classification: E24, E60, E64, F41

working papers series