Economic theory and econometric dynamics in modelling wages and prices in the United Kingdom
AbstractWe 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.
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Bibliographic InfoArticle provided by Springer in its journal Empirical Economics.
Volume (Year): 24 (1999)
Issue (Month): 3 ()
Note: received: January 1998/final version received: November 1998
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Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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