Are Real Wages and Unemployment Related? | Zendy

Jacobson Tor | Zendy; Vredin Anders | Zendy; Warne Anders | Zendy

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Are Real Wages and Unemployment Related?

Author(s) -

Jacobson Tor,

Vredin Anders,

Warne Anders

Publication year - 1998

Publication title -

economica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.532

H-Index - 65

eISSN - 1468-0335

pISSN - 0013-0427

DOI - 10.1111/1468-0335.00114

Subject(s) - unemployment , economics , relation (database) , econometrics , cointegration , business cycle , short run , error correction model , real wages , empirical evidence , macroeconomics , computer science , philosophy , epistemology , database

In this paper we propose an alternative method for investigating the sources behind the behaviour of real wages and unemployment. The model we study is a certain cointegrated VAR, a so‐called common trends model, which has become increasingly popular in the empirical growth/business cycle literature. This model leads us to emphasize the distinction between long‐run and short‐run relations. Using quarterly Swedish data (1965–90), we find only weak evidence of a short‐run relation between real wages and unemployment as reported in traditional single‐equation error correction models. There is even less evidence of a long‐run relation.

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