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Modelling Wages and Prices in Australia*
Author(s) -
BÅRDSEN GUNNAR,
HURN STAN,
MCHUGH ZOË
Publication year - 2007
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2007.00390.x
Subject(s) - economics , wage , inflation (cosmology) , imperfect competition , imperfect , competition (biology) , price setting , econometrics , simple (philosophy) , real wages , microeconomics , labour economics , ecology , linguistics , philosophy , physics , epistemology , theoretical physics , biology
This paper estimates a simultaneous‐equation model of wages and prices for Australia, underpinned by a competing claims framework of imperfect competition. Two separate co‐integrating relationships for wages and prices are identified by imposing the economic hypotheses implied by the theory. The steady‐state relationships for wages and prices are then embedded in a parsimonious, dynamic wage‐price model. The final model is both simple and parsimonious and able to describe the process of wage and price inflation in Australia.