Real Wages and the Cycle: The View from the Frequency Domain
In the time domain, the observed cyclical behavior of the real wage hides a range of economic in infuences that give rise to cycles of differing lengths and amplitudes. This may serve to produce a distorted picture of wage cyclicality. Here, we employ frequency domain methods that allow us decompose wages into cyclical components and to assess the relative contribution of each component. These are discussed in relation to wages alone (the univariate case) and to wages in relation to production or employment-based measures of the cycle (multivariate). In the multivariate dimension, we derive methods for determining whether (i) wage and business cycles cohere (ii) lead-lag or contemporaneous relationships exist and (iii) the degree of coherency between wage and business cycles is time dependent. We establish that real wages are strongly procyclical and that the business cycle is the dominant associated influence.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Jul 2001|
|Publication status:||published as 'Real earnings and business cycles: new evidence' in: Empirical Economics, 2009, 37 (1), 51-71|
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References listed on IDEAS
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- Marianne Baxter & Robert G. King, 1999.
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- Hart, Robert A. & Malley, James R., 1999. "On the Cyclicality and Stability of Real Earnings," IZA Discussion Papers 45, Institute for the Study of Labor (IZA).Full references (including those not matched with items on IDEAS)
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