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Wage Contracting in the Macroeconomy

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  • Dutkowsky, Donald H
  • Atesoglu, H Sonmez

Abstract

This paper investigates wage contracting in the macroeconomy. The authors derive an orthogonality condition to test for effects of long-term contracting based upon the generalized-method-of-moments estimator. To examine the viability of wage contracting within the macroeconomic structure, the authors specify and estimate a Fischer-type model. Tests for multiperiod, nonindexed contracts in determining the aggregate nominal wage rate generate mixed results. While the test for overidentifying restricti ons suggests a weak effect, findings from an orthogonality test indicate significance. The study provides support for a New Keynesian macroeconomic model and some evidence for wage inflexibility due to contracting. Copyright 1993 by Ohio State University Press.

Suggested Citation

  • Dutkowsky, Donald H & Atesoglu, H Sonmez, 1993. "Wage Contracting in the Macroeconomy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(1), pages 62-78, February.
    • Handle: RePEc:mcb:jmoncb:v:25:y:1993:i:1:p:62-78
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    Cited by:

    1. Ghosal, Vivek & Loungani, Prakash, 1996. "Evidence on Nominal Wage Rigidity from a Panel of U.S. Manufacturing Industries," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 650-668, November.
    2. Christian Calmès, 2005. "Self-Enforcing Labour Contracts and the Dynamics Puzzle," Staff Working Papers 05-1, Bank of Canada.
    3. Dutkowsky, Donald H., 1996. "Macroeconomic price stickiness: Evidence from the postwar United States," Journal of Economics and Business, Elsevier, vol. 48(5), pages 427-442, December.

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