Wage, Price, and Unemployment Dynamics and the Convergence to Purchasing Power Parity in the Euro Area
AbstractThe paper discusses the determination of wages, prices, productivity and unemployment in the Euro-wide area in the post Bretton Woods period. The econometric results provide strong evidence on a regime shift at the start of the EMS and the empirical analysis is done separately for the two regimes. Two variables, measuring different aspects of the convergence towards European purchasing power parity, are shown to be crucial for explaining inflation and unemployment behavior in the more recent regime. The results point to the importance of being on a sustainable ppp level when fixing the exchange rates.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 03-01.
Length: 41 pages
Date of creation: Dec 2002
Date of revision:
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European unemployment; PPP convergence; Balassa-Samuelsson effect; cointegrated VAR;
Find related papers by JEL classification:
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-01-12 (All new papers)
- NEP-EEC-2003-01-12 (European Economics)
- NEP-IFN-2003-01-12 (International Finance)
- NEP-LAB-2003-01-12 (Labour Economics)
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