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"Aggregate Price Changes and Price Expectations,"
Bank of St. Louis Review, November 1970, 18-28.
pdf file (1,758KB).
This paper discusses the basic price equation in my forecasting model--see
1971#5. On page 19 of
this paper it is noted that the price equation is a reduced form equation in
that the wage rate is not an explanatory variable in the price equation.
The use of reduced form price equations was popularized by Robert Gordon
beginning in the early 1980s (see, for example, Robert J. Gordon,
"Comments on George L. Perry, 'Inflation in Theory and
Practice,'", Brookings Papers on Economic Activity,
1980, 1, 249-257). However, when I moved from my forecasting model to
my current model in the mid 1970s,
I switched from the reduced form price equation
to structural price and wage equations.
See Chapter 5 in 1976#1 for the first
of these equations, and see 1997#2 for a recent
discussion of how these equations relate to the standard reduced form