Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
966140 | Journal of Macroeconomics | 2008 | 22 Pages |
Abstract
This paper compares empirically two alternative explanations of the relationship between aggregate price and labor share: the sticky price and the sticky information models. To compare models, we derive a similar analytical form for both models and use post WWII US labor share and aggregate price series. We use the Bayesian full information likelihood approach for parameter estimation, uncertainty evaluation, and model comparison. Statistical comparison of the two non-nested models and estimates of the empirical encompassing model lead to the same result - the sticky information model is dominated by the sticky price model. An unrestricted VAR, however, dominates both models.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Oleg Korenok,