We investigate the economic significance of trading off empirical validity of models against other desirable model properties. Our investigation is based on three alternative econometric systems of the supply side, in a model that can be used to discuss optimal monetary policy in Norway. Our...

type="main" xml:id="obes12061-abs-0001" <title type="main">Abstract</title> <p>We focus on the equilibrium unemployment rate as a parameter implied by a dynamic aggregate model of wage and price setting. The equilibrium unemployment rate depends on institutional labour market institutions through mark-up coefficients....</p>

This paper develops a dynamic model of Norwegian manufacturing wages which is consistent with the temporal properties of the data. The stability of the equation is tested by recursive methods. In a hypothetical steady-state, the wage-share is conditional on unemployment and a wedge term. Hence,...

We give an appraisal of the New Keynesian Phillips curve (NPCM) as an empirical model of European inflation. The favourable evidence for NPCMs on euro-area data reported in earlier studies is shown to depend on specific choices made about estimation methodology. The NPCM can be re-interpreted as...

The authors analyze the determinants of Norwegian households' consumption expenditure, using quarterly data for the period 1966(1)-1989(4). Expenditure, income and a broad measure of households wealth appear to form a cointegrating relationship. Likelihood ratio tests do not disprove that the...