Relative Prices, Real Wages, and Macroeconomic Policies : Some Evidence from Manufacturing in Japan and the United Kingdom

The effects of the oil price shocks of the 1970s were critically contingent on the domestic arrangements that determined the incidence of the shocks--specifically whether labor income or capital income bore the brunt. This differed between the two shocks in some countries and differed between countries. This paper focuses on two cases--Japan and the UK--on the structure of production, and on the incidence of the shocks to explain the very different macroeconomic effects of the oil price shocks