At 07:47 PM 6/8/00 -0700, you wrote:
>"It is a fairly well-established generalization in economic theory that
>during a period of a long rise in prices, money wages lag behind the
>prices of commodities, both retail and wholesale, so that real wages
>during such periods show a tendency to decline."
>
> -- Simon Kuznets (1930). _Secular Movements in Production and Prices_,
>pp. 207-8
>
>"If prices rise, the benefit accrues immediately to the entrepreneurial
>class. In time, however, competition among entrepreneurs compels them to
>bid up the prices paid for labor, land and capital until the surplus
>profits are absorbed."
>
> -- Alvin Hansen (1925), 'Factors Affecting the Trend of Real Wages,'
> American Economic Review, [cited by Kuznets op. cit. p. 208].
Somehow, some empirical research on this question has been done since 1930.
My impression is that it blames neither money wages nor prices for starting
the inflation process (just as it's neither low unemployment nor fast GDP
growth that does so). It's both, as part of an interconnected process.
(Most studies indicate that the real wage (nominal wage/price) is neither
pro- nor counter-cyclical.)
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
