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The Wage-Price Spiral: Industrial Country Evidence and Implications

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  • Ms. Magda E. Kandil

Abstract

Using quarterly time-series data for a sample of twelve industrial countries, the paper investigates the dynamics of nominal wage and price adjustments in the face of aggregate demand shocks. The evidence illustrates patterns of the wage-price spiral and accompanying fluctuations. During economic expansions, the overlap of nominal adjustments in labor and product markets prolongs output expansion while maintaining or increasing the standard of living. In contrast, structural and institutional settings appear to have moderated the severity of the effects of contractionary demand shocks on real output growth and the standard of living in the variety of countries under investigation.

Suggested Citation

  • Ms. Magda E. Kandil, 2003. "The Wage-Price Spiral: Industrial Country Evidence and Implications," IMF Working Papers 2003/164, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/164
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=16711
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    Cited by:

    1. Osman AKGÜL & Abdullah Miraç BÜKEY, 2020. "Türkiye’de Enflasyon ile Asgari Ücretler Arasındaki İlişki ve Ücret-Fiyat Sarmalı," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(78), pages 257-282, June.
    2. Michal Franta & Jan Vlcek, 2024. "Wage-Price Spirals: A Risk-Based Approach," Working Papers 2024/1, Czech National Bank.
    3. Dubravko Mihaljek & Sweta Saxena, 2010. "Wages, productivity and "structural" inflation in emerging market economies," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy and the measurement of inflation: prices, wages and expectations, volume 49, pages 53-75, Bank for International Settlements.

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