Testing Steady-State Implications for the NAIRU
Norwegian University of Science and Technology (NTNU) - Department of Economics
University of Oslo - Department of Economics
April 14, 2000
Estimates of the NAIRU are usually derived either from a Phillips-curve or from a real wage curve in an incomplete competition model. This paper investigates the correspondence between the operational NAIRU-concepts and the steady state of a dynamic wage-price model. We derive the parameter restrictions that secures such a correspondence. The full set of restrictions can be tested by econometric analysis of the wage-price system, and this method is demonstrated for Norwegian data. A set of necessary conditions can be tested from estimated 'wage-curves' alone. Existing international evidence from empirical wage equations are re-interpreted in light of these conditions.
Number of Pages in PDF File: 20
JEL Classification: C51, C52, E24, E31, J30working papers series
Date posted: May 30, 2000
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