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 wageprice 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
re-interpreted in light of these conditions.