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Testing for Equilibrium in the Australian Wage Equation

Author

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  • PHILIP E.T. LEWIS
  • GARRY A. MacDONALD
Abstract
In this paper a range of unit root and cointegration tests are applied to the time‐series variables most commonly found in the various specifications of the Australian wage equation. We find a contradiction between the standard Dickey‐Fuller (DF) tests and the results from Johansen estimation regarding the order of integration. The conclusion we reach using tests developed by Perron (1989,1990) is that all the variables are trend stationary processes and that the cointegration framework is inappropriate in this case.

Suggested Citation

  • PHILIP E.T. LEWIS & GARRY A. MacDONALD, 1993. "Testing for Equilibrium in the Australian Wage Equation," The Economic Record, The Economic Society of Australia, vol. 69(3), pages 295-304, September.
    • Handle: RePEc:bla:ecorec:v:69:y:1993:i:3:p:295-304
    DOI: 10.1111/j.1475-4932.1993.tb02109.x
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    References listed on IDEAS

    as
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    2. repec:bla:ecorec:v:63:y:1987:i:181:p:144-55 is not listed on IDEAS
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    5. Hendry, David F, 1986. "Econometric Modelling with Cointegrated Variables: An Overview," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 201-212, August.
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    Cited by:

    1. Alan Morris & Kenneth Wilson, 1994. "An Empirical Analysis of Australian Strike Activity: Further Evidence on the Role of the Prices and Incomes Accord," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 183-191, June.

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