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Forward-Looking Wages and Nominal Inertia in the ERM

Published online by Cambridge University Press:  26 March 2020

Bob Anderton ,
Ray Barrell ,
Jan Willem in't Veld  and
Nikitas Pittis
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Extract

The purpose of this note is to discuss the role of forward-looking behaviour in wage formation in the major economies, and to analyse the implications for policy analysis using the National Institute Global Econometric Model, NIGEM. Our policy analyses are directed at issues relating to the ERM. The first section of the note discusses nominal inertia and staggered contracts (see Taylor, 1980), whilst the second discusses bargaining and wage formation, using the analysis discussed in Layard, Nickell and Jackman (1991). The third section discusses some empirical work on wages undertaken at the Institute, whilst the fourth section analyses the implications of forward-looking wages for our model NIGEM. The final section concludes.

Type
Articles
Information
National Institute Economic Review , Volume 141 , August 1992 , pp. 94 - 105
Copyright
Copyright © 1992 National Institute of Economic and Social Research

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Footnotes

(1)

Our analysis has been undertaken on our global model NIGEM. It was developed at the Institute and is jointly maintained with the LBS. We would like to thank Mike Artis, Andrew Britton, Stephen Hall, Soterios Soteri and John Whitley for useful comments. This research was funded by the ESRC Macroeconomic consortium.

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