New Keynesian model with wages and prices is introduced and estimated by maximum likelihood. The steady state relationships of the model are imposed as testable restrictions on the long-run cointegrating relationships in an equilibrium correction framework, giving an equilibrium correction model...

In static single equation cointegration regression models the OLS estimator will have a non-standard distribution unless regressors are strictly exogenous. In the literature a number of estimators have been suggested to deal with this problem, especially by the use of semi-nonparametric...

Linear dynamic equilibrium correction mechanisms are shown to follow from the discretisation of continuous economic processes with steady-state solutions. In addition, the proposed procedure provides testable restrictions on the coefficients of the dynamic econometric model

Economic theories of imperfectly competitive labour markets predict that wages are linked to profits. In spite of this, profit variables are not explicitly specified in empirical models of wage formation that otherwise are appealing. Does this mean that theory overplays the role of profitability...