The Effects of Slow Growth and Recession on Wages, Prices and Labor Productivity

摘要

This study describes a partial macromodel of the economy and simulations based on that model. One purpose of the model is to determine the validity of two hypotheses concerning the economy. One is that wages are sticky; the other is that productivity growth and economic growth are positively related. Determining which of the two hypotheses is valid is done by simulating the model developed here. Two types of simulations were made: one for cycle analysis; and another for long run steady state equilibrium secular analysis. The results of the cyclical simulation analysis appears to support the sticky wage hypothesis. For the steady state analysis, the results also appear to support the sticky wage hypothesis. Another purpose of the model is to examine the interactive effects of the union and nonunion labor market. The interactive effects of the two markets are apparent from the regressions used to estimate the model.