Incomes Policy in a Political Environment: a Structural Model for the U.K. 1961–1980

Desai, Meghad; Keil, Manfred; Wadhwani, Sushil

doi:10.1007/978-94-009-6161-6_7

Cited by 9 publications

(7 citation statements)

References 12 publications

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“…This series is due to Desai, Keil, and Wadhwani (1984) and tries to measure the intensity as well as the occurrence of an incomes policy, by comparing the intended rate of inflation embodied in the policy with the existing rate. The most recent experience of an incomes policy-the "Social Contract" under the Callaghan government-was initially rather successful in facilitating the first bout of disinflation during 1976-78 without a significant rise in unemployment, but came badly unstuck during the "Winter of Discontent" in the first few months of 1979.…”

Section: The Determinants Of the Natural Ratementioning

confidence: 99%

Ten Years of Mrs. T.

Bean¹,

Symons²

1989

NBER Macroeconomics Annual

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Section: The Determinants Of the Natural Ratementioning

confidence: 99%

Ten Years of Mrs. T.

Bean¹,

Symons²

1989

NBER Macroeconomics Annual

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“…The real Wage impact of any given nominal pay norm can be calculated by deducting the underlying rate of prices or earnings inflation. Such estimates have also been calculated by Lawson (1981) and Desai et al (1983).…”

Section: Development Of a Q U~a T N E Me~swe Of Policymentioning

confidence: 60%

“…Quantitative measures of policy have recently been developed elsewhere (Desai et al, 1983 andLawson, 1981) but these have either not been applied in this form or have not been developed in a continuous framework, nor have they been adjusted for institutional effects. The presence of a quantitative and continuous measure of policy enables the construction of a model to explain the strength of policy.…”

Section: Discussionmentioning

confidence: 99%

“…Political variables similar to those used by Desai et al (1983) were included in the policy equation but with similar negative results. Although the popularity variable is almost statistically significant, this reflects simultaneous bias rather than a true independent political effect since it can be empirically described by the same features as the policy variable.…”

Section: The Munchester Schoolmentioning

confidence: 99%

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A Model of Incomes Policy in the U.K., 1963–79

Whitley¹

1986

The Manchester School

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I INTRODUCTIONThia paper examines models to explain the determinants of incomes policy using quantitative continuous measures of incomes policy. The paper applies the policy reaction b e w o r k to incomes policy allowing for simultaneous feedback between policy and idation with empirical results for the period 1961-79.With the recent esception of S w a n (1980), incomes policy has typically been treated as predetermined when estimating aggregate wage adjustment models. The traditional approach in the empirical literature has been to measure incomes policy either as a set of on-off dummy variables or to divide the sample set into periods of policy-off and periods of policy-on. The dummy variable approach has considerable limitations, not least that it is very subjective and cannot easily capture the variety of incomes policy experienced since 1960. The frequency of incomes policy also means that it is not appropriate to regard policy simply as a temporary nuisance. In fact, there is the danger of spurious results since the multitude of dummy variables pick up the influence of other unidentified factors. Although Henry and Ormerod (1978) have used dummy variables to attempt to capture any policy rebound, the dummy variable approach cannot adequately deal with issues of timing.A quantitative continuous measure of policy can more adequately capture the intensity of incomes policy. Such a meaaure can be developed by using information on the nominal wage norm and its exceptions. The "effedive" nominal norm can be translated into a measure of real wage pressure. The real wage approach can be justiiied by the growing acceptance of the ml wage resistance model (Henry et d., 1976). If prices are determined aa a lagged mark-up on costs then a successful restraint of nominal wages w i l l a h be a reduction in real wages, at least in the short M. A constant nominal wage target will, therefore, imply a diminution of the real wage impact on policy in the longer run. The inclusion of the real wage term *Menuacript received 26.1.84; &tal version received 22.1.85. 31

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“…In (24) q is the log of the average product of labour (Q = Y / L ) . IPD is a dummy variable for the incomes policy episodes (for details see Desai, Keil and Wadhwani, 1984). We introduce a first difference term in real wage A l ( wpr) in this equation.…”

Section: Olsmentioning

confidence: 99%

A keynesian macro‐econometric model of the UK: 1955–1984

Desai

Weber

1988

J of Applied Econometrics

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In this paper we present a small Keynesian macro‐economic model in which wage‐price determination is linked to the working of goods and money markets. By explicitly treating the Keynes effect we derive a general expression for the employment‐money supply elasticity, and draw the IS‐LM loci in the employment‐interest rate space Our empirical specification allows for short‐run disequilibrium dynamic adjustments around the static long‐run relations predicted by the theoretical model. By careful use of our specification search strategy we obtain a statistically sound econometric model, which exhibits sensible long‐run properties. A remarkable finding implied by our estimates is that equilibrium unemployment is negatively affected by both money supply and incomes policy.

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Incomes Policy in a Political Environment: a Structural Model for the U.K. 1961–1980

Cited by 9 publications

References 12 publications

Ten Years of Mrs. T.

Ten Years of Mrs. T.

A Model of Incomes Policy in the U.K., 1963–79

A keynesian macro‐econometric model of the UK: 1955–1984

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