Economic Theory and Econometric Dynamics in Modelling Wages and Prices in the United Kingdom

Posted: 13 Sep 1999

See all articles by Gunnar Bardsen

Gunnar Bardsen

Norwegian University of Science and Technology (NTNU) - Department of Economics

Paul Fisher

Bank of England

Abstract

We show that a "competing claims" model of imperfect competition can explain the movements of wages and prices in the United Kingdom, using quarterly data covering 1976-93. We argue that careful attention both to economic theory and to the interaction between dynamics and identification is crucial in the building of the model and to dynamic econometric models in general. We use a small numerical example with simulated cointegrated data to illustrate the potential pitfalls.

JEL Classification: C32, C51, E31, J30

Suggested Citation

Bardsen, Gunnar and Fisher, Paul, Economic Theory and Econometric Dynamics in Modelling Wages and Prices in the United Kingdom. Available at SSRN: https://ssrn.com/abstract=179543

Gunnar Bardsen (Contact Author)

Norwegian University of Science and Technology (NTNU) - Department of Economics ( email )

NTNU Dragvoll
N-7491 Trondheim
Norway

HOME PAGE: http://www.svt.ntnu.no/iso/gunnar.bardsen

Paul Fisher

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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