I find this debunking of the use of NULC fascinating.
The post 2008 decline of Macro Nominal Unit Labour Costs (NULC) in Ireland was not caused by austerity of wage restraint. It was caused by the housing bust (source: Eurostat, CBS). Which can’t be explained by neoclassical macro models. But which can be explained by simple arithmetic.
The bust led to the almost complete (from the top of my head: -93% at one point!) demise of ‘high NULC’ housing construction, which caused a decline of average macro NULC in Ireland – even when average wages did not change…. But this is not the only problem
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