Investigation co Integration with Structural Breaks in Inflation, Real Wages and Productivity

Abstract

This document shows the research of real wages, inflation and labor productivity interrelationships using co integration, Granger-causality and, most of all, and structural break tests. Tests for  assessments to variable’s over the period of 1973-2007 time corroborate the presence use of a structural break in 1987 and states that a 1 percent improvement in manufacturing sector real wages led to a rise in manufacturing market productivity of between 0.5 and 0.8 percent. Very similar quotes for the result of inflation on manufacturing market productivity have restricted precise significance. Granger causality results recommend that real income and inflation both Granger-cause productivity in the long run.