Empirical Studies in Macroeconomics
DOI link for Empirical Studies in Macroeconomics
Empirical Studies in Macroeconomics book
This chapter discusses the important applied studies in macroeconomics and to interpretation of the findings. In 1958 A. Phillips published his famous article studying the relationship between unemployment and the rate of change of money wage rates in the UK for 1861-1957. Phillips believed that each cross would give an approximation to the rate of change of wages that would be associated with the indicated level of unemployment if unemployment was held constant at that level. Several points of interest and criticism arise out of the way in which Phillips fitted the curve to his data. The cost-push theory most commonly presented is that money wage rates rise because of trade union power or pushfulness. The general argument is that the price variable in the wage equation is a proxy variable for the influence of price anticipations on wage offers and aspirations.