Stability and wage acceleration in macroeconomic models of cyclical growth
AbstractThis paper is concerned with the stability of macroeconomic models in which there is no long-run trade-off between unemployment and inflation, because of a wage adjustment equation based on the NAIRU concept. It is shown, for a simple theoretical model and for the Bergstrom-Nowman-Wymer continuous-time macro-econometric model of the UK, that there is a bounded range of positive values of the wage acceleration parameter (determining the effect of labour demand on wage acceleration) for which the steady state is asymptotically stable. Then, each model generates damped cycles about a path converging to the steady-state neoclassical growth path. Copyright © 2001 John Wiley & Sons, Ltd.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.
Volume (Year): 16 (2001)
Issue (Month): 3 ()
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Web page: http://www.interscience.wiley.com/jpages/0883-7252/
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- William Barnett & Yijun He, 2012.
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WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS
201226, University of Kansas, Department of Economics, revised Sep 2012.
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- Bergstrom, A. R. & Nowman, K. B. & Wymer, C. R., 1992. "Gaussian estimation of a second order continuous time macroeconometric model of the UK," Economic Modelling, Elsevier, vol. 9(4), pages 313-351, October.
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- Joanne S. Ercolani, 2007. "Cyclical Trends in Continuous Time Models," Discussion Papers 07-13, Department of Economics, University of Birmingham.
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