The role of economic theory in modelling the long run

Article Abstract:

An econometrician contends the use of cointegration analysis in modeling the long run in applied economics. Instead, he focuses on the use of economic theory-based intertemporal optimization methods for the conception and estimation of the long run relationship. The empirical use of an intertemporal optimization method requires attention to aggregation issues in non-representative agent models, and dynamic non-linearity issues in non-LQ intertemporal optimization models.

Econometrics & Model Building, Economics, Econometrics, Business models, Economic methods

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The role of sectoral interactions in wage determination in the UK economy

Article Abstract:

An investigation of sectoral wage behavior across 16 sectors of the UK labor market was carried out for the period 1957-1990 using disaggregate and aggregate models. The study, which featured wage-wage comparisons, reveal the impact of external wage expectations on real wages in the 16 industries. It also highlights the role of complex dynamic realignments on wage determination and the need for a disaggregated model to characterize aggregate real wage formation.

United Kingdom, Economic aspects

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Wage bargaining and the Phillips curve: the identification and specification of aggregate wage equations

Article Abstract:

The structure of existing wage equations render the identification of factors governing wage determination a problem. However, the problem may be solved using wage bargaining models for the static case. This results, for the dynamic case, in a wage equation similar to a Phillips curve where unemployment is correlated to real wages' rate of increase. The method is illustrated by deriving an aggregate wage equation for the United Kingdom for the period 1956-1987.

Research, Parameter estimation, Phillips curve

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