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Using Wavelets In Economics. An Application On The Analysis Of Wage-Price Relation

Author

Listed:
  • Vasile-Aurel Caus

    (Department of Mathematics, University of Oradea, Oradea, Romania)

  • Daniel Badulescu

    (Department of Economics, University of Oradea, Oradea, Romania)

  • Mircea Cristian Gherman

    (Technical University of Cluj-Napoca, Romania)

Abstract

In the last decades, more and more approaches of economic issues have used mathematical tools, and among the most recent ones, spectral and wavelet methods are to be distinguished. If in the case of spectral analysis the approaches and results are sufficiently clear, while the use of wavelet decomposition, especially in the analysis of time series, is not fully valorized. The purpose of this paper is to emphasize how these methods are useful for time series analysis. After theoretical considerations on Fourier transforms versus wavelet transforms, we have presented the methodology we have used and the results obtained by using wavelets in the analysis of wage-price relation, based on some empirical data. The data we have used is concerning the Romanian economy - the inflation and the average nominal wage denominated in US dollars, between January 1991 and May 2016, highlighting that the relation between nominal salary and prices can be revealed more accurately by use of wavelets.

Suggested Citation

  • Vasile-Aurel Caus & Daniel Badulescu & Mircea Cristian Gherman, 2017. "Using Wavelets In Economics. An Application On The Analysis Of Wage-Price Relation," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 2(1), pages 32-42, March.
    • Handle: RePEc:ora:jrojbe:v:2:y:2017:i:1:p:32-42
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    References listed on IDEAS

    as
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    3. Jonsson, Magnus & Palmqvist, Stefan, 2004. "Do Higher Wages Cause Inflation?," Working Paper Series 159, Sveriges Riksbank (Central Bank of Sweden).
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    More about this item

    Keywords

    wage-price spiral; wavelet transforms; Fourier transforms; spectral analysis;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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