Hostname: page-component-586b7cd67f-rcrh6 Total loading time: 0 Render date: 2024-11-30T15:11:02.528Z Has data issue: false hasContentIssue false
  • English
  • Français

Forward-Looking Wages and Nominal Inertia in the ERM

Published online by Cambridge University Press:  26 March 2020

Bob Anderton ,
Ray Barrell ,
Jan Willem in't Veld  and
Nikitas Pittis
Get access Rights & Permissions [Opens in a new window]

Extract

The purpose of this note is to discuss the role of forward-looking behaviour in wage formation in the major economies, and to analyse the implications for policy analysis using the National Institute Global Econometric Model, NIGEM. Our policy analyses are directed at issues relating to the ERM. The first section of the note discusses nominal inertia and staggered contracts (see Taylor, 1980), whilst the second discusses bargaining and wage formation, using the analysis discussed in Layard, Nickell and Jackman (1991). The third section discusses some empirical work on wages undertaken at the Institute, whilst the fourth section analyses the implications of forward-looking wages for our model NIGEM. The final section concludes.

Type
Articles
Information
National Institute Economic Review , Volume 141 , August 1992 , pp. 94 - 105
Copyright
Copyright © 1992 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(1)

Our analysis has been undertaken on our global model NIGEM. It was developed at the Institute and is jointly maintained with the LBS. We would like to thank Mike Artis, Andrew Britton, Stephen Hall, Soterios Soteri and John Whitley for useful comments. This research was funded by the ESRC Macroeconomic consortium.

References

Alogoskoufis, G. (1992), ‘Monetary accommodation, exchange rate regimes and inflation persistence’, Economic Journal, No. 2, May pp 461–480.Google Scholar
Anderton, R. and Barrell, R. (1992), ‘The ERM and structural change in European labour markets, a study of 10 countries’, NIESR, mimeo, paper presented at RES conference, April 1992.Google Scholar
Anderton, R., Barrell, R. and in't Veld, J.W., (1992), ‘Forward looking Wages and the Analysis of Monetary Union’, in Barrell, R. and Whitley, J. eds, Macroeconomic Policy Coordination in Europe, SAGE Publications, London 1992.Google Scholar
Anderton, R.Barrell, R. and McHugh, J. (1992), ‘Nominal convergence in European wage behaviour: achievements and explanations’ in Barrell (ed), Economic Convergence and Monetary Union in Europe, SAGE Publications, London, 1992.Google Scholar
Barrell, R. (1990), ‘Has the EMS changed wage and price behaviour in Europe?’ National Institute Economic Review, No. 134, November.CrossRefGoogle Scholar
Barrell, R., Gurney, A. and In't Veld, J.W. (1992), ‘The real exchange rate, fiscal policy and the role of wealth: an analysis of equilibrium in a monetary union’, Journal of Forecasting, May.CrossRefGoogle Scholar
Barrell, R. and In't Veld, J.W. (1992), ‘Wealth effects and fiscal policy in the National Institute Global Econometric Model’, National Institute Economic Review, 140, May 1992.CrossRefGoogle Scholar
Barrell, R., Caporale, G., Hall, S. and Garrett, A. (1992), ‘Learning about Mmnetary union: an analysis of boundedly rational learning in European labour markets’, National Institute Discussion Paper No. 22.Google Scholar
Blake, A. and Westaway, P., ‘An analysis of the impact of finite horizons on macroeconomic control’, National Institute Discussion Paper No. 11.CrossRefGoogle Scholar
Cuthbertson, K., Hall, S. and Taylor, M., (1992), Applied Econometric Techniques, Harvestor/Wheatsheaf, London 1992.Google Scholar
Calvo, G.A. (1983), ‘Staggered contracts and exchange rate policy’ in Frenkel, J. (ed), Exchange Rates and International Macroeconomics, Chicago, University of Chicago Press.Google Scholar
Driffill, J. and Miller, M. (1992), ‘Is the road to monetary union paved with recession ?’ in Barrell, R. and Whitley, J. eds. op cit.Google Scholar
Farmer, R. (1991), ‘Sticky Prices’ Economic Journal Vol. 101 November 1991.CrossRefGoogle Scholar
Godfrey, L.G. (1988), Misspecification Tests in Econometrics, Cambridge University Press.Google Scholar
In't Veld, J.W. (1992), ‘The diverse experience of Netherlands, Belgium and Denmark in the ERM’ in Barrell ed.(1992) op cit.Google Scholar
Hall, S. and Henry, S.G.B. (1987), ‘Wage models’. National Institute Economic Review, No. 119, February 1987.CrossRefGoogle Scholar
Lucas, R. (1976), ‘Econometric policy evaluation: a critique’ in Brunner, K. and hleltaer, A.H. (Eds), The Phillips Curve and Labour Markets, Carnegie-Rochester Conference Series on Public Policy, No. 1.CrossRefGoogle Scholar
Layard, R., Nickell, S. and Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press.Google Scholar
Moghadem, R. and Wren-Lewis, S., (1989) ‘Are wages forward looking?’, National Institute Discussion Paper No. 163.Google Scholar
Niesr, (1992) August NIGEM Model Manual.Google Scholar
Pagan, A. (1984), ‘Econometric issues in the analysis of regressions with generated regressors’, International Economic Review, Vol. 25, No. 1.CrossRefGoogle Scholar
Taylor, J. (1979), ‘Staggered wage setting in a macroeconomic model with rational expectations’, American Economic Review, Papers and Proceedings, Vol. 69.Google Scholar
Taylor, J. (1980), ‘Aggregate demand and staggered contracts, Journal of Political Economy, 1, 1–24.CrossRefGoogle Scholar
Westaway, P. (1992), ‘A forward looking approach to learning in macroeconomic models’, National Institute Economic Review, No. 140, May 1992.Google Scholar