Abstract: | Previous researchers of the Australian aggregate wage equation have chosen to use overlapping quarterly rates of change instead of the simple quarterly rates of change in heir empirical specification of this relationship. This paper argues that there is little intuitive or empirical evidence to support a continuation of this preference. The use of simple quarterly rates of change yields a well-specified and stable empirical relationship, thus offering a viable alternative to the traditional approach. The estimation results provide further evidence or some of the Australian Phillips curve controversies. |