Testing Steady-State Implications for the NAIRU

Bardsen, Gunnar; Nymoen, Ragnar

doi:10.2139/ssrn.223428

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Testing Steady-State Implications for the NAIRU

20 Pages Posted: 30 May 2000

See all articles by Gunnar Bardsen

Gunnar Bardsen

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

Ragnar Nymoen

University of Oslo - Department of Economics

Date Written: April 14, 2000

Abstract

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.

JEL Classification: C51, C52, E24, E31, J30

Suggested Citation: Suggested Citation

Bardsen, Gunnar and Nymoen, Ragnar, Testing Steady-State Implications for the NAIRU (April 14, 2000). Available at SSRN: https://ssrn.com/abstract=223428 or http://dx.doi.org/10.2139/ssrn.223428