a comparative analysis of the rationality of consensus forecasts of u s economic indicators the purpose of this article is to investigate the rationality of two survey forecasts of selective u s macroeconomic performance measures that were widely followed in the financial markets during the 1990 2000 period the research compares the rationality of survey forecast data from money market services inc and thomson financial this article extends prior research that has evaluated the rationality of money market services data for earlier time periods while also evaluating similar consensus forecast data from thomson financial that were widely reported in both barron s and the wall street journal during the 1990s

short term inflation expectations evidence from a monthly survey note the assumption that economic agents have rational expectations is commonplace in studies of macroeconomic policy and asset market behavior research examining observable expectations from surveys however has generally found that the data reject the rational expectations hypothesis friedman 1980 reports that forecasts of long term interest rates from surveys of financial market participants are not rational figlewski and wachtel 1981 note that most investigators of the livingston survey data on economists inf lation expectations conclude that these data do not conform to the rational expectations hypothesis british survey data on the inflation expectations of consumers analyzed by evans and gulamani 1984 and on the inflation expectations of business firms examined by pesaran 1985 also appear inconsistent with rational expectations the failure of survey data to pass tests of rationality have led researchers such as mishkin 1983 to question the usefulness of survey data to proxy expectations this paper examines a different source of expectations data namely the surveys of money market participants conducted by money market services inc mms data from the mms surveys have been widely used in studies of how asset prices respond to unanticipated changes in economic variables recent papers by urich and wachtel 1984 pearce and roley 1985 and smirlock 1986 employ the median predicted inflation rate from the mms survey to construct a measure of the unexpected component of inflation announcements

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

the return of the wage phillips curve the standard new keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment under some assumptions that relation takes a form similar to that found in empirical applications starting with the original phillips 1958 curve and may thus be viewed as providing some theoretical foundations to the latter the structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the u s economy even under the strong assumption of a constant natural rate of unemployment

estimating a wage curve for britain 1973 90 following a w phillips s 1958 original work on the united kingdom applied research on unemployment and wages has been dominated by the analysis of highly aggregated time series data sets however it has proved difficult with such methods to uncover statistically reliable models this paper adopts a different approach it uses macroeconomic data on 175 000 british workers from 1973 to 1990 to provide evidence for the existence of a negatively sloped relationship linking the level of pay to the local rate of unemployment the paper casts doubt on standard ideas in macroeconomics regional economics and labor economics copyright 1994 by royal economic society

the last word on the wage curve abstract since 1990 there has been extensive international research on the responsiveness of wages of individuals to changing local labour market conditions for many countries an inverse relationship between wages and local unemployment rates has been found in their book the wage curve blanchflower and oswald argued that the unemployment elasticity of pay is around 0 1 in most countries in a 1995 literature survey card referred to this striking empirical regularity as being close to an empirical law of economics nonetheless reported elasticities do vary even excluding outliers between about 0 5 and 0 1 there is also considerable heterogeneity among wage curve studies in terms of data and model specification this paper carries out meta analytic techniques on a sample of 208 elasticities derived from the literature to uncover the reasons for the differences in empirical results across studies several causes of variation are identified there is also clear evidence of downward publication bias in addition many reported t statistics are biased upwards due to the use of aggregate unemployment rates a maximum likelihood method and a trimming procedure are used to correct for these biases both methods give similar results for our sample an unbiased estimate of the wage curve elasticity at the means of study characteristics is about 0 07

reconciling the wage curve and the phillips curve the wage curve is the negative relationship that links wage levels to the unemployment rate it fits accurately with modern non competitive labour market models but goes against a phillips curve modelling because the latter ties wage growth to the unemployment rate in this article we present a comprehensive review of these non competitive models highlighting recent contributions that try to eliminate the possible gap that exists between the concepts of the wage curve on the one hand and the phillips curve on the other copyright blackwell publishers ltd 2005

toward an economic model of the japanese firm i owe a great deal to professor moses abramovitz who suggested that i write this article i appreciate his constant encouragement and guidance which aided me throughout its preparation i am also indebted to three anonymous referees of the journal and to professors ryutaro komiya and michael riordan for their critical comments and helpful suggestions needless to say i am solely responsible for the views expressed in this paper

tests of the nominal contracting hypothesis using stocks and bonds of the same firms abstract we test the nominal contracting hypothesis by examining the price responses of stocks and long term bonds issued by the same firms to inflation surprises we fail to find evidence that unexpected inflation transfers wealth to real from nominal contract holders i e to stockholders from bondholders an alternative interpretation of previous tests that seemingly support the nominal contracting hypothesis is proposed based on firms asset rather than liability structures our test results and alternative interpretation suggest caution in ascribing to nominal contracts major intrafirm wealth redistributions due to unexpected inflation

real wage rigidities and the new keynesian model most central banks perceive a trade off between stabilizing inflation and stabilizing the gap between output and desired output however the standard new keynesian framework implies no such trade off in that framework stabilizing inflation is equivalent to stabilizing the welfare relevant output gap in this paper we argue that this property of the new keynesian framework which we call the divine coincidence is due to a special feature of the model the absence of nontrivial real imperfections we focus on one such real imperfection namely real wage rigidities when the baseline new keynesian model is extended to allow for real wage rigidities the divine coincidence disappears and central banks indeed face a trade off between stabilizing inflation and stabilizing the welfare relevant output gap we show that not only does the extended model have more realistic normative implications but it also has appealing positive properties in particular it provides a natural interpretation for the dynamic inflation unemployment relation found in the data

the wage local unemployment relationship in a highly regulated labour market greece livanos i the wage local unemployment relationship in a highly regulated labour market greece regional studies using data obtained from 80 000 employees this paper examines the relationship between individual wages and regional unemployment in greece the findings highlight the dynamics of the local labour markets in a case such as greece where the organisation for economic co operation and development oecd claims that wage flexibility is limited this study does not find evidence that wages in greece are rigid but finds a wage curve elasticity of close to 0 1 which corresponds to evidence from many counties interestingly graduates are found to be the most responsive group of workers to the behaviour of local labour markets livanos i le rapport salaire chomage local dans un marche du travail extremement reglemente la grece regional studies a partir des donnees provenant de 80 000 salaries cet article cherche a examiner le rapport entre les salaires des individus et le chomage regional

a theory of the stakeholder corporation there is a widely held view within the general public that large corporations should act in the interests of a broader group of agents than just their shareholders the stake holder view this paper presents a framework where this idea can be justified the point of departure is the observation that a large firm typically faces endogenous risks that may have a significant impact on the workers it employs and the consumers it serves these risks generate externalities on these stakeholders which are not inter nalized by shareholders as a result in the competitive equilibrium there is under investment in the prevention of these risks we suggest that this under investment problem can be alleviated if firms are instructed to maximize the total welfare of their stakeholders rather than shareholder value alone stakeholder equilibrium the stake holder equilibrium can be implemented by introducing new property rights employee rights and consumer rights and instructing managers to maximize the total value of the firm the value of these rights plus shareholder value if there is only one firm the stakeholder equilibrium is pareto optimal however this is not true with more than one firm and or heterogeneous agents which illustrates some of the limits of the stake holder model

prices productivity and wage bargaining in open economies according to the standard union bargaining model unemployment benefits should have big effects on wages but product market prices and productivity should play no role in the wage bargain we formulate an alternative strategic bargaining model where labour and product market conditions together determine wages a wage equation is derived and estimated on aggregate data for four nordic countries wages are found to depend not only on unemployment and the replacement ratio but also on productivity international prices and exchange rates there is evidence of considerable nominal wage rigidity exchange rate changes have large and persistent effects on competitiveness

is inflation sticky abstract new keynesian sticky price models predict that monetary policy can affect real variables however they also predict that inflation can be reduced without depressing output or employment in fact bringing down inflation is costly presenting a challenge to the new keynesian model two departures from the new keynesian model predict costly disinflation one assumes sticky inflation rather than sticky prices while the other assumes less than perfectly rational expectations taking into account information from surveys of inflation expectations i find the evidence suggests that inflation is not sticky and that inflation expectations are less than perfectly rational

sticky prices fair wages and the co movements of unemployment and labor productivity growth abstract this paper studies the co movements of unemployment and labor productivity growth for the u s economy measures of co movements in the frequency domain indicate that co movements between variables differ strongly according to the frequency first long term and business cycle co movements are larger than short term co movements second co movements are negative in the short and long run but positive over the business cycle a new keynesian model that combines nominal rigidity on the goods market sticky prices and real rigidity on the labor market fair wages is shown to be quantitatively consistent with the observed co movements both in the long term and over the business cycle however the model fails to explain the short term co movements

two views of the geographic distribution of unemployment this paper investigates the extent to which equilibrium and disequilibrium explanations can account for unemployment rate differentials between cities it shows that shocks that disturb the steady state relationship among the unemployment rates of metropolitan areas tend to be eliminated by mobility within a single year it also shows that high unemployment areas tend to be those with attractive climates and amenities high wages and high unemployment insurance it argues that the main effect of government programs that create jobs in high unemployment areas will be to lure additional job seekers to those areas

the euro area wage curve abstract we use longitudinal micro data to examine the wage curve for the euro area over the period 1994 2001 the overall unemployment elasticity in the euro area is 0 14 the elasticity varies across groups of workers and along the wage distribution

testing for convergence across the greek regions siriopoulos c and asteriou d 1998 testing for convergence across the greek regions reg studies 32 537 546 during the last five years few issues have proved more controversial in empirical economics than the so called convergence hypothesis this paper examines the issue of convergence across greek regions following the theoretical basis of the neoclassical model of economic growth our empirical results support the popular view prevailing in greece about the existence of dualism across the southern and northern regions of greece a possible explanation for this may be the lack of experience that poor countries like greece have in comparison with the rich ones rich countries have the combined ability to educate themselves as they grow rich and the endogenous ability to accumulate the knowledge upon which these efforts are made the same argument can be also used as an explanation for regional differences the fact that poor regions do not have previous experience and knowledge for efficient i

applicant screening and performance related outcomes a fundamental problem faced by employers is how to elicit effort from employees most economic models suggest that employers meet this challenge by monitoring employees carefully to prevent shirking but there is another option that relies on heterogeneity across employees and that is to screen job candidates to find workers with a stronger work ethic who require less monitoring we might therefore expect employers who screen candidates more intensively to monitor them less using data from a national sample of us employers we find that employers who screen applicants more intensively for factors that should predict work ethic also monitor employees less and also make greater use of systems such as teamwork where monitoring by supervisors is more difficult this screening is also associated with higher wages higher employee productivity and lower involuntary turnover rates screening for other attributes such as work experiences and academic performance does not produce these results jel codes m51 m54 j30

toward a stakeholder theory of the firm the saturn partnership this paper seeks to engage the organization theory community in contemporary debates over the role of the corporation in american society by using the case of the saturn corporation to develop and illustrate a stakeholder theory of the firm one normative and three positive questions are posed for a stakeholder theory the normative question is why should stakeholder models be given serious consideration at this moment in history the positive questions are 1 under what conditions is a stakeholder firm likely to emerge in the united states 2 what are the critical determinants of performance in a stakeholder firm and 3 what will determine the sustainability and diffusion of this organizational form in the american environment the history design features and dynamics of the labormanagement partnership at saturn are used to illustrate and interpret a specific case of employees as stakeholders saturn s original mission governance structure and internal processes fit the characteristics of a stakeholder firm employees establish themselves as influential definitive stakeholders by using their knowledge to improve organizational performance the local union likewise contributes to firm performance by organizing workers into a dense social network that contributes to problem solving conflict resolution and quality improvement however the legal and political environment in which the firm operates produces considerable uncertainty over the sustainability and diffusion of saturn s features in particular and the stakeholder organizational form in general additional hypotheses and research questions are proposed to continue theory building around the more general model of the stakeholder firm researchers are encouraged to take up the analysis of stakeholder models and thereby contribute to the contemporary and future debates over the role of the corporation in american society

testing steady state implications for the nairu estimates of the nairu are usually derived either from a phillips curve or from a wage curve this paper investigates the correspondence between the operational nairu concepts and the steady state of a dynamic wage price model we derive the parameter restrictions that secure that correspondence the full set of restrictions can be tested by econometric analysis of the wage price system and this method is demonstrated for norwegian data a set of necessary conditions can be tested from estimated wage curves alone existing international evidence from empirical wage equations are reinterpreted in light of these conditions

optimal monetary policy in economies with dual labor markets abstract we present a dynamic stochastic general equilibrium dsge new keynesian model with indivisible labor and a dual labor market a walrasian one where wages are fully flexible and a unionized one characterized by real wage rigidity we show that the negative effect of a productivity shock on inflation and the positive effect of a cost push shock are crucially determined by the proportion of firms that belong to the unionized sector the larger this number the larger are these effects consequently the larger the union coverage the larger should be the optimal response of the nominal interest rate to exogenous productivity and cost push shocks the optimal inflation and output gap volatility increases as the number of the unionized firms in the economy increases

the wage curve a review in the wage qurve david g blancflower and andrew j oswald argue that there is a fundamental negative relation between wages and the unemployment rate in a worker s local labor market blancflower and oswald use large scale micro data sets to estimate this relation for the united states britain and 10 other countries i review their empirical methods and findings and provide some further evidence on the nature of the wage curve relationship in the united states i conclude that there is a strong statistical correlation between rates of pay and local unemployment although the interpretation of this correlation remains unresolved this abstract was borrowed from another version of this item

multiple job holding among male workers in greece livanos i and zangelidis a multiple job holding among male workers in greece regional studies this paper studies the incidence of multiple job holding in greece and contributes to the literature by examining its determinants its variance across different regions and the effect of the business cycle on its occurrence the empirical analysis highlights the importance of both pecuniary and non pecuniary motives behind multiple job holding and reveals significant variations in its incidence across regions with areas that have a large primary sector having higher multiple job holding rates finally multiple job holding is found to be pro cyclical with the probability of holding a second job estimated to increase during economic expansion livanos i et zangelidis a les emplois multiples masculins en grece regional studies l article cherche a etudier la frequence des emplois multiples en grece et contribue a la documentation en examinant ses determinants sa variance a travers les diverses regions

are survey forecasts of macroeconomic variables rational this article examines the rationality of forecasts of 11 macroeconomic variables among the nonstationary series only surveys of housing starts the unemployment rate and the trade balance are rational forecasts among the stationary series survey forecasts for only consumer prices and personal income are consistent with rational expectations lack of rationality in forecasts of durable goods industrial production leading indicators money supply and retail sales suggests that such forecasts do not fully exploit public information indeed survey forecasts for industrial production and retail sales can be improved significantly with past information copyright 1995 by university of chicago press

the nature of occupational unemployment rates in the united states hysteresis or structural this article provides new evidence on the nature of occupational differences in unemployment dynamics which is relevant for the debate between the structural or hysteresis hypotheses we develop a procedure that permits us to test for the presence of a structural break at unknown date our approach allows the investigation of a broader range of persistence than the 0 1 paradigm about the order of integration usually implemented for testing the hypothesis of hysteresis in occupational unemployment in almost all occupations we find support for both the structuralist and the hysteresis hypotheses but stress the importance of estimating the degree of persistence of seasonal shocks along with the degree of long run persistence on raw data without applying seasonal filters indeed hysteresis appears to be underestimated when data are initially adjusted using traditional seasonal filters

the effects of corporate strategy and workplace innovations on union representation this paper explores the decline of union membership within partially organized firms using data from two conference board surveys of labor relations practices 1977 and 1983 the authors test a series of propositions concerning the effects of corporate industrial relations values and strategies and workplace innovations on union representation and membership the results show that whereas the average firm reduced the number of workers represented by unions by approximately 977 from 1977 to 1983 firms that placed a high priority on union avoidance reduced union representation by an average of 2 647 workers over the same period moreover the typical firm that emphasized union avoidance reduced the probability that its new facilities would be organized from approximately 15 percent to less than 1 percent

the rationality of federal funds rate expectations evidence from a survey this study finds that expectations of two week maintenance period average federal funds rates as measured by the money market services survey from march 1984 to november 1987 are biased only marginally outperform random walk forecasts and have forecast errors that are correlated with in sample information however these results are tempered by findings that the survey forecasts incorporate the information in out of sample arima forecasts although the latter are less accurate than random walk forecasts in addition the accuracy of the survey forecasts increases for maintenance periods in which the discount rate changes copyright 1989 by ohio state university press

a model of the wage curve abstract this paper uses a simple dynamic efficiency wage model of phelps 1994 phelps and hoon 1992 to explain the wage curve of blanchflower and oswald 1994 we derive a theoretical elasticity of wages with respect to employment which depends on only one parameter this invariance may go part of the way to explaining why blanchflower and oswald found wage curve estimates that were so similar across countries

announcement effects and the theory of storage an empirical study of lumber futures we investigate how lumber futures returns are affected by monthly housing starts announcements and analyze the dependence of the response on lumber inventories and time to delivery to do so we develop a generalized least squares gls method to jointly analyze simultaneously traded contracts we find that increases in the unanticipated component of housing starts announcements increase returns on lumber futures contracts further and as predicted by the theory of storage but previously unrecorded the effects of housing starts shocks decline with lumber inventories there is also a time to delivery effect near delivery contracts respond more sharply to housing starts news than do farther out contracts

public private wage differentials in greece separate earnings functions for public and private sector by gender are estimated for greece with appropriate correction for selectivity bias using family expenditure survey data for 1988 then a comparison of the average pay that would be received by public and private sector employees if they were paid according to the same pay structure is undertaken the empirical evidence suggests that while the observed pay advantage of male public sector employees is rather explained by higher qualifications in the case of women qualification differences partly explains the observed public private wage differential

real wages inflation and labour productivity in australia this paper presents an analysis of real wages inflation and labour productivity interrelationships using cointegration granger causality and most importantly structural change tests applications of tests to australian data over the 1965 2007 period corroborate the presence of a structural break in 1985 and show that a 1 percent increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0 5 and 0 8 percent comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance granger causality test results suggest that real wages and inflation both granger cause productivity in the long run

wage dynamics reconciling theory and evidence u s macroeconomic evidence shows a negative relation between the rate of change of wages and unemployment in contrast most theories of wage determination imply a negative relation between the level of wages and unemployment in this paper we ask whether one can reconcile the empirical evidence with theoretical wage relations we reach three main conclusions first we derive the condition under which the two can indeed be reconciled we show the constraints that such a condition imposes on the determinants of workers reservation wages as well as the relative importance of workers outside options as opposed to match specific productivity in wage determination second in the light of this condition we reinterpret the presence of an error correction term in macroeconomic wage relations for most european economies but not in the united states third we show that whether this condition holds or not has important implications for the effects of a number of variables from real interest rates to oil prices to payroll taxes on the natural rate of unemployment this abstract was borrowed from another version of this item

the real thing a dynamic profile of the term structure of real interest rates and inflation expectations in the united kingdom 1982 89 this article estimates real interest rates and inflation expectations from market observable data without assuming anything about the form of agents expectation formation mechanism by examining prices of index linked and conventional gilt edged securities form the u k bond market real interest rates and inflation expectations are computed quarterly beginning 1982 2 for up to fourteen maturities ranging from 1988 to 2024 copyright 1990 by the university of chicago

the determinants of nominal income output and the price level a synthesis of the keynesian and neo classical views this paper deals with one of the oldest problems in macroeconomics the business cycle of the old tradition the fluctuations of output and the price level of the keynesian tradition and the real business cycle of the recent literature it examines how demand and supply functions evolve through time after an exogenous shock to demand it borrows from keynes the idea that in static equilibrium aggregate demand and aggregate supply functions are essential tools of macroeconomic dynamics it borrows from friedman the notion that money plays an essential role in the determination of the macroeconomic equilibrium the paper derives some empirical implications with regard to the rational behavior of economic agents and shows that after a change in aggregate demand real output and the price level will follow a counterclockwise movement in the price level real output plane this implies that it is incorrect to hypothesize as has been done by both keynesians and monetarists alike that the two variables would be positively correlated in our model this would only be true if the accelerator principle were to play an important role in the dynamics of aggregate demand

has the wage curve nullified the harris todaro model further us evidence abstract economists traditionally believed that regional unemployment rates and wages were positively related this notion has recently been attacked by proponents of the wage curve which suggests the exact opposite this paper attempts to replicate the wage curve using different us data

integrative re use systems as innovative business models for devising sustainable product service systems re use implies recovering items from the waste stream to use them in identical or similar processes mostly at consumer level currently re use is restricted to niches but by 2020 the european commission wants to mainstream re use as a waste management option to increase resource efficiency ecologically oriented work integration social enterprises focussing on re use re use eco wises might help accomplish as they not only intend to re integrate marginalised people into the labour market but provide comprehensive re use services e g repair and thus constitute a novel kind of sustainable product service system spss this paper contributes to a scientific framework for re use eco wises by linking existing theoretical knowledge on spss to novel knowledge from three cases representing the variety of re use eco wises in austria for analysis we use the so called business model canvas adding a comprehensive stakeholder consideration results show that re use eco wises contribute to all three dimensions of sustainability by helping reduce waste and increasing resource productivity and by providing jobs and affordable goods for disadvantaged people full implementation however will need additional efforts from all stakeholders involved including the eco wises themselves but also public authorities and society at large

motivators of mobilization although the possibility that a firm s stakeholders may take damaging measures against it in response to its activities has been an underlying assumption of stakeholder theory from inception the conditions that predispose stakeholders to act against firms remain largely unexplored in the literature based on work in equity theory expectancy theory and resource dependence theory we present and test hypotheses concerning stakeholders propensities to impose sanctions upon or to support firms using a vignette based experiment we found strong confirmation of the criticality of fairness in the firm stakeholder relationship stakeholder equity perceptions were unequivocally associated with the proclivity to sanction the firm or to engage in prosocial behaviours of benefit to it stakeholder expectancy perceptions and resource dependence were related to only certain forms of stakeholder action indicating that researchers should take care to differentiate between types of stakeholder response when investigating questions surrounding stakeholder mobilization our results also suggest specific avenues for stakeholder dialogue that could help firms mitigate the likelihood of stakeholders taking damaging action against them

labour market reforms in greece and the wage curve we offer strong evidence of a wage curve mechanism in greece which seems to be substantially enhanced by reforms aimed at increasing labour market flexibility male older more qualified and rural employees appear to be more sensitive to regional unemployment

how corporate social performance is institutionalised within the governance structure since ackerman in corporate social responsiveness the modern dilemma 1973 pleaded for the institutionalisation of corporate social performance csp in business processes researchers have focused on the role of strategy in csp this article demonstrates that csp is institutionalised within the governance structure we will attempt to make this clear by means of a description of the dutch system of corporate governance under certain circumstances dutch companies are already bound to csp due to prevailing legislation a governance perspective shows that csp is institutionalised within a company s governance structure processes of responsiveness since long regarded as a starting point of csp analysis appear to be decision making processes within these processes the expectations of the stakeholders can be institutionalised trust can be built and interests can be incorporated this makes csp context dependent however it is possible to analyse companies by comparing the companies individual governance structures the article concludes that csp analysis can fruitfully extend into analysing in the role of the stakeholders in the influence pathways that are incorporated within the governance structure

who should control a corporation toward a contingency stakeholder model for allocating ownership rights a number of companies allocate ownership rights to stakeholders different from shareholders despite the fact that the law attributes these rights to the equity holders this article contributes to an understanding of this evidence by developing a contingency model for the allocation of ownership rights the model sheds light on why companies despite pressures from the law vary in their allocation of ownership rights the model is based on the assumption that corporations increase their chance to survive and prosper if the stakeholders supplying critical contributions receive the ownership rights according to the model critical contributions involve 1 contractual problems due to specific investments long term relationships and low measurability 2 the assumption of the uncertainty resting on the company and 3 the supply of scarce and valuable resources the model is dynamic because it also provides a basis for understanding why the allocation of ownership rights changes with time finally the article presents the strategies companies can use to realize an efficient distribution of ownership rights among their stakeholders

firm characteristics unanticipated inflation and stock returns this paper re examines the effects of nominal contracts on the relationship between unanticipated inflation and an individual stock s rate of return this study differs in three main ways from previous research first announced inflation data are used to examine the effects of unanticipated inflation second a different specification is used to obtain more efficient estimates third additional nominal contracts are considered the empirical results indicate that time varying firm characteristics related to inflation predominately determine the effect of unanticipated inflation on a stock s rate of return a firm s debt equity ratio appears to be particularly important in determining the response

monetary policy and macroeconomic stability under alternative demand regimes in this paper we analyse the interaction of macroeconomic activity and the dynamics of real wages from a theoretical perspective by means of a system dynamic approach we investigate the economic viability of wage and profit led demand regimes by analysing not only the effect of real wages on output but also the feedback mechanisms of macroeconomic activity on the real wages furthermore in this context we focus on the role of monetary policy as a macroeconomic stabilisation mechanism in the two mentioned demand regimes

the properties of inflation expectations evidence for india abstract empirical inferences about particular forms of agents inflation expectations are crucial for the conduct of monetary policy this paper is an attempt to explore the properties of the reserve bank of india s survey data of households inflation expectations the paper shows that survey respondents do not form expectations rationally regardless of the reference measures of inflation used further results indicate that inflation expectations are formed purely in backward looking manner suggesting that the reserve bank of india rbi has a low degree of credibility within the survey respondents the study then formulates a model to identify individual elements of the backward looking expectations in the data the results suggest that the respondents short term expectations for wpi inflation are purely naive type of expectations only influenced by respondents earlier period expectations in the case of cpiiw inflation the results however suggest that the short term expectations are not purely naive type but also contain adaptive as well as a static forms of expectations this means that respondents consider their previous forecast errors about cpiiw inflation and draw recent price developments in the cpiiw while forming their overall short term inflation expectations this finding provides some formal evidence that the cpi based inflation measure is better suited than wpi inflation as a nominal anchor in the rbi s recent transition to inflation targeting regime