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Modelling Wages and Prices in Australia

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  • GUNNAR BÅRDSEN
  • STAN HURN
  • ZOË MCHUGH

Abstract

This paper estimates a simultaneous‐equation model of wages and prices for Australia, underpinned by a competing claims framework of imperfect competition. Two separate co‐integrating relationships for wages and prices are identified by imposing the economic hypotheses implied by the theory. The steady‐state relationships for wages and prices are then embedded in a parsimonious, dynamic wage‐price model. The final model is both simple and parsimonious and able to describe the process of wage and price inflation in Australia.

Suggested Citation

  • Gunnar Bårdsen & Stan Hurn & Zoë Mchugh, 2007. "Modelling Wages and Prices in Australia," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 143-158, June.
    • Handle: RePEc:bla:ecorec:v:83:y:2007:i:261:p:143-158
    DOI: 10.1111/j.1475-4932.2007.00390.x
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    Cited by:

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    2. David Norman & Anthony Richards, 2012. "The Forecasting Performance of Single Equation Models of Inflation," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 64-78, March.
    3. David Norman & Anthony Richards, 2010. "Modelling Inflation in Australia," RBA Research Discussion Papers rdp2010-03, Reserve Bank of Australia.
    4. Rita Duarte & Carlos Marques, 2013. "The dynamic effects of shocks to wages and prices in the United States and the Euro Area," Empirical Economics, Springer, vol. 44(2), pages 613-638, April.
    5. Saten Kumar & Don J. Webber & Geoff Perry, 2012. "Real wages, inflation and labour productivity in Australia," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2945-2954, August.
    6. Leung Andrew P., 2015. "The Fisher Hypothesis and Its Implications for Defined Benefits," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 9(1), pages 107-124, January.

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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