American Journal of Applied Sciences

Long Cycles in Employment, Inflation and Real Unit Wage Costs, Qualitative Analysis and Quantitative Assessment

Peter Flaschel, Goeran Kauermann and Timo Teuber

DOI : 10.3844/ajassp.2005.69.77

American Journal of Applied Sciences

Volume 2, Issue 13

Pages 69-77

Abstract

This study provided some theoretical foundations for the empirical hypothesis. At first presented two simple prototype models of inflation, stagflation and disinflation. We concluded that there are cycles with a phase length much longer than the ordinary business cycle (in fact approximately five times as long as we saw in the empirical phase plots of the paper) which are not long waves from a Schumpeterian perspective, but caused by the fact that systematic changes in real unit-wage costs and also in inflation caused by changes in the (un-)employment rate may be slow, giving rise to interchanging long-lasting regimes of economic prosperity on the one hand and economic stagnation on the other hand.

Copyright

© 2005 Peter Flaschel, Goeran Kauermann and Timo Teuber. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.