hero working papers

Modelling shifts in the wage-price and unemployment-inflation relationships in Italy, Poland, and the UK

Number: 145
Year: 1999
Author(s): Massimiliano Marcellino(IGIER and EUI, Florence) and Grayham E. Mizon (EUI, Florence and Southampton University, UK)

The relationship between wages, prices, productivity, inflation, and unemployment in Italy, Poland, and the UK between the 1960's and the early 1990's is modelled as a cointegrated vector autoregression subject to regime shifts. For each of these economies there is clear evidence of a change in the underlying equilibria of this sector of the economy. Hypotheses concerning the similarity of the transition from a rigid to a flexible labour market are tested.