Wage dynamics in Denmark

Compared with the previous decades the rate of wage increase in Denmark has been subdued since the mid-1990s, given the pressure that gradually arose in the labour market. The paper describes changes in the labour market in recent years, including labour-market reforms and decentralisation of wage formation, and an empirical analysis of wage development in Denmark from 1975 to 2007 is performed. The results indicate that in the long term Danish wage development can be described by a real-wage curve. In the short term a wage equation with error correction towards this real-wage curve seems to outperform a simple Phillips curve

Dankort payments as a timely indicator of retail sales in Denmark

The paper examines whether electronic payments by card (Dankort) provides a useful indicator for retail sales in Denmark. Dankort transactions data is available about one week after the reference month, while the retail sales index is only published about three weeks later. We add to previous work by setting up a model for the seasonally adjusted volume index for retail sales. The extensions considered are meant to further enhance the usefulness of the nowcasting model for conjunctural analysis. The out-of-sample forecasting ability of the model compares favourably with a benchmark autoregression

Endogenous Exchange Rate Pass-through when Nominal Prices are Set in Advance

This paper develops a model of endogenous exchange rate pass-through within an open economy macroeconomic framework, where both passthrough and the exchange rate are simultaneously determined, and interact with one another. Pass-through is endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship between exchange rate volatility and economic structure may be substantially affected by the presence of endogenous pass-through. Our key results show that pass-through is related to the relative stability of monetary policy. Countries with relatively low volatility of money growth will have relatively low rates of exchange rate pass-through, while countries with relatively high volatility of money growth will have relatively high pass-through rates.

Endogenous Exchange Rate Pass-through when Nominal Prices are Set in Advance

This paper develops a model of endogenous exchange rate pass through within an open economy macroeconomic framework, where both pass-through and the exchange rate are simultaneously determined, and interact with one another. Pass-through is endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship between exchange rate volatility and economic structure may be substantially affected by the presence of endogenous pass-through. Our key results show that pass-through is related to the relative stability of monetary policy. Countries with relatively low volatility of money growth will have relatively low rates of exchange rate pass-through, while countries with relatively high volatility of money growth will have relatively high pass-through rates.

Identifying monetary policy in a small open economy under fixed exchange rates

We demonstrate how to identify monetary policy under fixed exchange rates in a structural vector autoregression (SVAR) using Denmark as a case study. The identifying restrictions are compared to SVARs for flexible exchange-rate regimes. Our basic model generates a plausible central-bank reaction function, and the responses to monetary shocks are in accordance with theory. We extend the basic model and econometric approach to incorporate the central bank's interventions on the foreign-exchange market

A Service of zbw Leibniz-Informationszentrum Wirtschaft Leibniz Information Centre for Economics Endogenous Exchange Rate Pass- through when Nominal Prices are Set in Advance

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Working Papers of Danmarks Nationalbank describe research and development, often still ongoing, as a contribution to the professional debate. Terms of use: Documents in The viewpoints and conclusions stated are the responsibility of the individual contributors, and do not necessarily reflect the views of Danmarks Nationalbank. As a general rule, Working Papers are not translated, but are available in the original language used by the contributor. Danmarks Nationalbank's Working Papers are published in PDF format at www.nationalbanken.dk. A free electronic subscription is also available at this Web site. The subscriber receives an e-mail notification whenever a new Working Paper is published. Abstract This paper develops a model of endogenous exchange rate pass-through within an open economy macroeconomic framework, where both pass-through and the exchange rate are simultaneously determined, and interact with one another. Pass-through is endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship between exchange rate volatility and economic structure may be substantially affected by the presence of endogenous pass-through. Our key results show that pass-through is related to the relative stability of monetary policy. Countries with relatively low volatility of money growth will have relatively low rates of exchange rate pass-through, while countries with relatively high volatility of money growth will have relatively high pass-through rates. Resumé Papiret udvikler en model med endogent gennemslag fra valutakurs til priser inden for en åben økonomi makromodel, hvor valutakurs og gennemslag både bestemmes simultant og påvirker hinanden. Gennemslaget er endogent, fordi virksomheder vaelger den valuta, de saetter deres eksportpriser i. Der er en entydig ligevaegt for graden af gennemslag under den betingelse, at valutakursvolatiliteten stiger, når graden af gennemslag falder. Vi viser, at sammenhaengen mellem valutakursvolatilitet og økonomiers struktur kan afhaenge betydeligt af, om gennemslaget er endogent bestemt. Det centrale resultat er, at gennemslag afhaenger af pengepolitikkens relative stabilitet. Lande med relativt lav volatilitet i pengemaengdevaeksten vil have relativt lave grader af gennemslag, mens lande med relativt høj volatilitet i pengemaengdevaeksten vil have relativt høje grader af gennemslag. * This paper is a combination and comprehensive revision o

Endogenous Exchange Rate Pass-through when Nominal Prices are Set in Advance

This paper develops a model of endogenous exchange rate pass-through within an open economy macroeconomic framework, where both pass-through and the exchange rate are simultaneously determined, and interact with one another. Pass-through is endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship between exchange rate volatility and economic structure may be substantially affected by the presence of endogenous pass-through. Our key results show that pass-through is related to the relative stability of monetary policy. Countries with relatively low volatility of money growth will have relatively low rates of exchange rate pass-through, while countries with relatively high volatility of money growth will have relatively high pass-through rates

Endogenous Exchange Rate Pass-Through When Nominal Prices are Set in Advance

This paper develops a model of endogenous exchange rate pass-through within an open economy macroeconomic framework, where both pass-through and the exchange rate are simultaneously determined, and interact with one another. Pass-through is endogenous because firms choose the currency in which they set their export prices. There is a unique equilibrium rate of pass-through under the condition that exchange rate volatility rises as the degree of pass-through falls. We show that the relationship between exchange rate volatility and economic structure may be substantially affected by the presence of endogenous pass-through. Our key results show that pass-through is related to the relative stability of monetary policy. Countries with relatively low volatility of money growth will have relatively low rates of exchange rate pass-through, while countries with relatively high volatility of money growth will have relatively high pass-through rates.