The Wage-Price Spiral: Industrial Country Evidence and Implications
August 1, 2003
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Summary
Using quarterly time-series data for a sample of twelve industrial countries, the paper investigates the dynamics of nominal wage and price adjustments in the face of aggregate demand shocks. The evidence illustrates patterns of the wage-price spiral and accompanying fluctuations. During economic expansions, the overlap of nominal adjustments in labor and product markets prolongs output expansion while maintaining or increasing the standard of living. In contrast, structural and institutional settings appear to have moderated the severity of the effects of contractionary demand shocks on real output growth and the standard of living in the variety of countries under investigation.
Subject: Commodity markets, Financial markets, Labor, Labor markets, Real wages, Wage adjustments, Wages
Keywords: Asymmetric Fluctuations, Commodity markets, contractionary demand shocks, Labor markets, nominal wage, Output Effect, price inflation, real wage adjustment, real wage growth, Real wages, Standard of Living, Wage adjustments, Wage-Price Spiral, Wages, WP
Pages:
36
Volume:
2003
DOI:
Issue:
164
Series:
Working Paper No. 2003/164
Stock No:
WPIEA1642003
ISBN:
9781451858013
ISSN:
1018-5941
