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Wage Dynamics In A Structural Time Series Model For Luxembourg

Author

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  • Aka, Bédia F.
  • P. Pieretti

Abstract

This paper examines the relationships between monetary wage and its theoretical explanatory variables using a Structural Time Series (STS) model in order to take into account the unobserved components (trend, cycle, seasonal and irregular) of wage. Theoretically, the monetary wage is negatively related to labor productivity and unemployment rate but positively to the consumer price index and foreign prices. Our empirical results for a small open economy as Luxembourg indicate that the wage is positively related to the consumer price index and foreign prices as predicted by the theory, but the labor productivity and unemployment rate are not significant in the explanation of wages dynamics in the Luxembourg economy.

Suggested Citation

  • Aka, Bédia F. & P. Pieretti, 2008. "Wage Dynamics In A Structural Time Series Model For Luxembourg," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 5(2).
    • Handle: RePEc:eaa:ijaeqs:v:5:y2008:i:2_2
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    References listed on IDEAS

    as
    1. Holden,S., 1999. "Wage setting under different monetary regimes," Memorandum 12/1999, Oslo University, Department of Economics.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Wage Bargaining; Labor Unions; Unobserved Components Models; Structural Time Series;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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