IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Wage Contracts and Labor Adjustment Costs as Endogenous Propagation Mechanisms

We examine the dual role of labor adjustment costs and staggered wage contracts as endogenous propagation mechanisms. We show that a dynamic general equilibrium model which combines these two features explains the autocorrelation functions of output growth and nominal wage growth, as well as the significant trend-reverting component in aggregate output. Transitory shocks are measured as shocks to the growth of money supply. The structural parameters of the model are estimated for the US postwar economy using a GMM procedure. The overidentifying restrictions implied by our model are very far from being rejected. Dans ce travail, nous étudions le rôle des coûts d'ajustement du travail et des contrats salariaux imbriqués en tant que mécanismes endogènes de propagation pour un modèle du cycle économique. Nous montrons qu'un modèle dynamique d'équilibre général qui inclut ces deux éléments est capable d'expliquer à la fois les fonctions d'autocorrélation du taux de croissance de la production et du taux de croissance du salaire nominal, et la présence d'une composante transitoire importante pour la production. Les chocs transitoires dans ce modèle proviennent de chocs au taux de croissance de la monnaie. Les paramètres structurels du modèle sont estimés à l'aide de la méthode des moments généralisés pour un échantillon couvrant les États-Unis d'après-guerre. Un test de spécification basé sur les restrictions de suridentification ne peut rejeter le modèle.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: Main text
Download Restriction: no

File URL:
File Function: Main text
Download Restriction: no

Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 69.

in new window

Length: 42 pages
Date of creation: Feb 1999
Handle: RePEc:cre:crefwp:69
Contact details of provider: Postal:
P.O. Box 8888, Downtown Station, Montreal (Canada) Quebec, H3C 3P8

Phone: (514) 987-6181
Fax: (514) 987-8494
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cre:crefwp:69. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stéphane Pallage)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.