Özet:

Abstract enIn this study, the dynamics of nominal wage and price adjustments is investigated in the face of aggregate demand shocks, using quarterly data cover the period from 1998 to 2012 for Turkey. To test the asymmetry in the dynamics of the wage-price spiral, aggregate demand shocks are decomposed into positive and negative components. According to results, wage-price spiral occurs slowly because the nominal adjustments in labor and product markets are not simultaneous. The slow adjustments of nominal wages and prices in the face of demand shocks cause that aggregate demand shocks have persistent effects on real variables. In addition, the increase in output growth and real wage growth during expansions appears larger compared to the reduction during contractions in Turkey. This condition points out the asymmetric effect of the positive and negative components of aggregate demand shocks on real variables

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