Big Data

Real Wages And The Business Cycle In Germany

Date Added: Sep 2010
Format: PDF

This paper establishes stylized facts about the cyclicality of real consumer wages and real producer wages in Germany. As detrending methods, the authors apply the deterministic trend model, the Beveridge-Nelson decomposition, the Hodrick-Prescott filter, the Baxter-King filter and the structural time series model. The detrended data are analyzed both in the time domain and in the frequency domain. The great advantage of an analysis in the frequency domain is that it allows to assess the relative importance of particular frequencies for the behavior of real wages. In the time domain, they find that both real wages display a procyclical pattern and lag behind the business cycle.