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Non-linearities & Equilibria in a Model of Distributive-Demand Cycles

June 3, 2010

The authors offer results of a non-parametric estimate of the US wage- Phillips Curve as a simplified version of the model of the wage-price spiral by Flaschel and Krolzig.

Making use of Okun's law, the non-linearity in the wage inflation-employment relation translates into a non-linearity in the so-called distributive curve of the economy. They provide a dynamical analysis both in wage-led and profit-led effective demand regimes.

Authors: Daniele Tavani, Peter Flaschel and Lance Taylor
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