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Is there a signalling role for public wages? Evidence for the euro area based on macro data

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  • Javier J. Pérez

    ()
    (Banco de España)

  • A. Jesús Sánchez

    ()
    (Universidad Pablo de Olavide)

Abstract

Do public sector wages exert presures on private sector wages, or has private sector a leadership role in wage setting?. This paper tries to isolate the pure signalling effect that one sector might exert on the other by controlling for other determinants of wages (prices, productivity, institutions) for the main euro area economies (Germany, France, Italy and Spain) and the periods 1980-2007 and 1991-2007. It exploits avilable quarterly information not yet used in the literature, and combine different data sources in the framework of mixed frequencies time series models. The quarterly frequency of our data allows us to check the existence of strong evidence of public wages’ leadership, either in conjunction with bidirectional links from the private sector (Germany and Spain) or pure public wage leadership (France in the sample 1991-2007, Italy for within-the-year linkages).

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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0934.

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Length: 33 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:bde:wpaper:0934

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Keywords: government wages; private sector wages; signalling; causality; mixed frequency data; casual graph;

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Cited by:
  1. Florence Jaumotte & Piyaporn Sodsriwiboon, 2010. "Current Account Imbalances in the Southern Euro Area," IMF Working Papers 10/139, International Monetary Fund.

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