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To Pool or to Aggregate? Tests with a Dynamic Panel Macroeconometric Model of Australian State Labor Markets

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Author Info
Kausik Chaudhuri (Indira Gandhi Institute of Developmental Research)
Jeffrey Sheen (University of Sydney)

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Abstract

We construct a dynamic error correction model of the Australian labor market using a macroeconomic panel across seven states from 1972:3 to 1999:1. Medium-run equilibrium estimates support a real wage-productivity gap and an unemployment gap. The dynamic short-run estimates support expectations-augmented Phillips curves for wages and prices, and demand-led employment growth. We compare three procedures - pooled, aggregate and mean group estimates. Considerable heterogeneity existed across states in the pooled procedure, and state-level variables had a significant impact in the aggregate procedure. Out-of-sample aggregate forecasting for the pooled, aggregate and mean group procedures suggests that the pooled one performs best.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Topics in Macroeconomics.

Volume (Year): 7 (2007)
Issue (Month): 1 ()
Pages: 1365-1365
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Handle: RePEc:bep:mactop:v:7:y:2007:i:1:p:1365-1365

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Related research
Keywords: panel cointegration panel macroeconometric modeling Australian state labor markets aggregation

Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Badri Narayanan G, 2005. "Effects of trade liberalisation, environmental and labour regulations on employment in India's organised textile sector," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2005-005, Indira Gandhi Institute of Development Research, Mumbai, India. [Downloadable!]
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