Real Wages and the Business Cycle in Germany

37 Pages Posted: 4 Oct 2010

See all articles by Martyna Marczak

Martyna Marczak

University of Hohenheim

Thomas Beissinger

University of Hohenheim; IZA Institute of Labor Economics

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Abstract

This paper establishes stylized facts about the cyclicality of real consumer wages and real producer wages in Germany. As detrending methods we apply the deterministic trend model, the Beveridge-Nelson decomposition, the Hodrick-Prescott filter, the Baxter-King filter and the structural time series model. The detrended data are analyzed both in the time domain and in the frequency domain. The great advantage of an analysis in the frequency domain is that it allows to assess the relative importance of particular frequencies for the behavior of real wages. In the time domain we find that both real wages display a procyclical pattern and lag behind the business cycle. In the frequency domain the consumer real wage lags behind the business cycle and shows an anticyclical behavior for shorter time periods, whereas for longer time spans a procyclical behavior can be observed. However, for the producer real wage the results in the frequency domain remain inconclusive.

Keywords: real wages, business cycle, frequency domain, time domain, Germany, trend-cycle decomposition, structural time series model, phase angle

JEL Classification: E32, C22, C32, J30

Suggested Citation

Marczak, Martyna and Beissinger, Thomas, Real Wages and the Business Cycle in Germany. IZA Discussion Paper No. 5199, Available at SSRN: https://ssrn.com/abstract=1686490 or http://dx.doi.org/10.2139/ssrn.1686490

Martyna Marczak (Contact Author)

University of Hohenheim ( email )

Schloss, Museumsfluegel
Stuttgart, 70593
Germany

HOME PAGE: http://labour.uni-hohenheim.de/

Thomas Beissinger

University of Hohenheim ( email )

Schloss Museumsflügel
Stuttgart, 70593
Germany

HOME PAGE: http://labour.uni-hohenheim.de/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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