Empirical models of Australian wages and prices are either single equation, equilibrium correction models or structural VAR models. Both theory and empirical evidence from other countries, however, suggests that wages and prices are jointly determined. Consequently, this paper estimates a...

The unemployment rate in Australia is modelled as an assymmetric and non-linear function of aggregate demand, productivity, real wages and unemployment benefits. Negative changes in aggregate demand cause the unemployment rate to rise rapidly, while real wage rigidity contributes its to slow...

Models of the aggregate unemployment rate have traditionally been estimated from structural models of the labour market or in a linear single-equation framework. However, theory as well as evidence suggest that the unemployment rate is asymmetric and should be modelled in a non-linear framework....

Linear dynamic equilibrium correction mechanisms are shown to follow from the discretisation of continuous economic processes with steady-state solutions. In addition, the proposed procedure on the coefficients of the dynamic econometric model.