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Lidt om DØRS' selvforståelse: om lønrelationerne i SMEC

Research output: Working paperResearch

  • Søren H. Harck, Denmark
  • http://www.asb.dk/omos/institutter/departmentofeconomics/
According to the interpretation of the Danish macroeconomic model SMEC that is being offered by its originator (The Secretariate of The Economic Council (DØRS)) the model entails a vertical long-run supply curve. Closer scrutiny, however, reveals this conception to be devoid of any foundation at all: if the wage-to-price elasticity is taken to be equal to one (as stipulated by DØRS), the model turns out to imply, even in the long run, an old-fashioned, stable Phillips curve; and if, more realistically, this elasticity is taken to be smaller than one, the error-correction specification by DØRS does in fact entail a horizontal Phillips curve, the level of which is determined by the exchange rate adjusted foreign inflation rate. Evidently, the policy implications of getting the interpretation right are, potentially, huge.
Original languageDanish
Publication statusPublished - 1997

    Research areas

  • SMEC, DØRS, Phillips-kurve, Fejlkorrektion, HHÅ forskning

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