Book contents
- Frontmatter
- Contents
- Foreword by Robert M. Solow
- Preface
- Introduction
- PART ONE THE HISTORY, THEORY, AND MEASUREMENT OF PRODUCTIVITY GROWTH
- PART TWO INTERPRETING PRODUCTIVITY FLUCTUATIONS OVER THE BUSINESS CYCLE
- PART THREE THE THEORY OF THE INFLATION-UNEMPLOYMENT TRADEOFF
- PART FOUR EMPIRICAL STUDIES OF INFLATION DYNAMICS IN THE UNITED STATES
- Part Four Introduction
- 14 Can the Inflation of the 1970s be Explained?
- 15 The Output Cost of Disinflation in Traditional and Vector Autoregressive Models
- 16 German and American Wage and Price Dynamics: Differences and Common Themes
- 17 Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU
- Subject Index
- Author Index
- References
16 - German and American Wage and Price Dynamics: Differences and Common Themes
Published online by Cambridge University Press: 10 December 2009
- Frontmatter
- Contents
- Foreword by Robert M. Solow
- Preface
- Introduction
- PART ONE THE HISTORY, THEORY, AND MEASUREMENT OF PRODUCTIVITY GROWTH
- PART TWO INTERPRETING PRODUCTIVITY FLUCTUATIONS OVER THE BUSINESS CYCLE
- PART THREE THE THEORY OF THE INFLATION-UNEMPLOYMENT TRADEOFF
- PART FOUR EMPIRICAL STUDIES OF INFLATION DYNAMICS IN THE UNITED STATES
- Part Four Introduction
- 14 Can the Inflation of the 1970s be Explained?
- 15 The Output Cost of Disinflation in Traditional and Vector Autoregressive Models
- 16 German and American Wage and Price Dynamics: Differences and Common Themes
- 17 Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU
- Subject Index
- Author Index
- References
Summary
Persistent Unemployment and Europessimism
Economic pessimism in Europe has been substantially based on the contrasting evolution of unemployment during the 1980s between Europe and the United States. While the U.S. unemployment rate fell from over 10 percent in early 1983 to nearly 5 percent in 1988–1990, the rate for the EC remained above 10 percent for six straight years (1983–8) and fell only modestly thereafter. The causes of high European unemployment have been posed as a choice between restrictive demand policies and structural impediments at the microeconomic level. Published economic research, so far mainly based on data through the mid 1980s, has as yet reached no consensus on the relative persuasiveness of these two explanations. The economic recovery of several European countries in the late 1980s has generated new data that might break through this stalemate.
Given the new weight of the German economy within Europe, its role as the anchor of the EMS, and the recent controversy created by the antiinflationary policies pursued by the Bundesbank, it seems natural to choose Germany for a detailed comparative study with the United States. Following 1960, for almost fifteen years extremely low unemployment rates of about 1 percent were at the core of the German economic “miracle” and provoked transatlantic envy when contrasted with the average 5 percent American unemployment rate over the same period. But after 1973 German unemployment rose steadily and exceeded American unemployment during each year between 1984 and 1990.
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- Information
- Productivity Growth, Inflation, and UnemploymentThe Collected Essays of Robert J. Gordon, pp. 420 - 456Publisher: Cambridge University PressPrint publication year: 2003