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An Empirical Study on the Wage and Price Stickiness of US Economy (1990-2009)

Author

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  • Leyla BAŞTAV

    (Banking Regulation and Supervision Agency (BDDK))

Abstract

The study aims to analyze US economy for the term 1990-2009 with emphasis on price formation and provide evidence on the mechanism through which business cycles occur. According to New Keynesian thinking major structural trait of the economy is non-clearing markets under imperfect competition with asymmetry and uncertainties. Generally empirical evidence is quite scarce in NK literature whereas theoretical research is abundant. Recent empirical research in the field has revealed evidence in favor of wage rigidity in developed economies. In this study econometric estimation of six equations on price formation has also revealed evidence for wage rigidity in the form of “inertia”. Inertia may be either due to expectations” or presence of “staggered wage contracts”. Thus we conclude that business cycle dynamics of fluctuations in output and employment should be followed in the labor markets and relevant models of the economy should concentrate on them to explain dynamics.

Suggested Citation

  • Leyla BAŞTAV, 2011. "An Empirical Study on the Wage and Price Stickiness of US Economy (1990-2009)," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 22(81), pages 45-64.
    • Handle: RePEc:eyd:eyjrnl:v:22:y:2011:i:81:p:45-64
    DOI: 10.5455/ey.20017
    Note: [Turkish Title] ABD Ekonomisinde Ücret ve Fiyat Yapışkanlığı Üzerine Ampirik Bir Çalışma (1990-2009) [Turkish Abstract] Çalışmanın amacı ABD ekonomisini 1990-2009 döneminde fiyat oluşum mekanizmaları çerçevesinde analiz ederek ekonomik dalgalanmaları ortaya çıkaran mekanizmalar hakkında belirlemelerde bulunmaktır. Yeni Keynesyen görüşe göre ekonomilerde temel özellik asimetri ve belirsizliklerin bulunduğu aksak rekabetçi yapıda piyasaların tam rekabetçi dengeye ulaşamamasıdır. Yeni Keynesyen görüşe ilişkin fazlasıyla teorik yaklaşım varken bu alandaki ampirik çalışmalar yetersiz bulunmaktadır. Son dönemlerde bu alanda gerçekleştirilen ampirik araştırmalarda gelişmiş ülkelerde ücret katılığı tespit edilmiştir. Bu çalışmada da altı fiyat denkleminin ekonometrik tahmini ile “atalet” şeklinde fiyat katılığının bulunduğu ortaya çıkmıştır. Atalet “beklentiler” veya “farklı vadelerde yenilenen ücret anlaşmalarının ” varlığına bağlı olarak görülebilir. Böylece, üretim ve istihdamdaki ekonomik dalgalanmaların çıkış dinamiği işgücü piyasalarından araştırılmalı ve ekonomik modellerde bu piyasalara yoğunlaşılmalıdır. [Turkish Keywords] Yeni Keynesyen ekonomi, ekonomik dalgalanmalar, fiyat katılıkları, makroekonomik modeileme, işgücü piyasalarının yapısı.
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    More about this item

    Keywords

    New Keynesian economics; business cycles; price rigidities; macroeconomic modelling; labor market structure.;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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