THE PRICE-WAGE MECHANISM IN POLAND - AN ENDOGENOUS SWITCHING MODEL

Authors
OSIEWALSKI J WELFE A
Citation
J. Osiewalski et A. Welfe, THE PRICE-WAGE MECHANISM IN POLAND - AN ENDOGENOUS SWITCHING MODEL, Economics of planning, 30(2-3), 1997, pp. 205-220
Citations number
33
Journal title
Economics of planning → ACNP
ISSN journal
00130451
Volume
30
Issue
2-3
Year of publication
1997
Pages
205 - 220
Database
ISI
SICI code
0013-0451(1997)30:2-3<205:TPMIP->2.0.ZU;2-G
Abstract
This paper proposes a two-equation price-wage model that enables to te st whether the inflationary pressure on wage rate is only present when the rate of inflation is greater than some threshold value. Since the likelihood function for this model is very nonstandard, we develop a small-sample Bayesian approach to estimate its parameters. Our empiric al results for Poland, 1962-1993, give support to the hypothesis of th e price-wage spiral with a positive threshold value of inflation.