The study explores time series properties of three wage net discount rate series derived using interest rates based on (alternatively) 1-year, 6-month and 3-month Treasury securities coupled with wage growth rates, initially for the period from 1981:01 to 2012:06, then subsequently through 2012:12. Stationarity tests are run on the full series and various sub-series to identify any portion of the series on which reliable forecasting can be based. Initially no support is found for the total offset hypothesis based on the full-time series (but support is subsequently found for total offset when exploring various data sub-series). Positive findings include that the three trended wage net growth rate series for the entire period under study are stationary, implying that reliable short-term forecasting of wage net discount rates is possible based on each of the trended series. Short-run forecasts based on the trended series are presented for 2012:07–2012:12 and compared to actual data in the period. Finally, the three trended wage net discount rate series are re-examined for 1981:01–2012:12, with short-term forecasting equations presented. Various sub-series of WNDRs are then explored in hopes of finding one or more that may be stationary about a constant term. Additional testing identifies three sub-series all ending 2012:12 with varying start dates that have desirable stationarity properties. The sub-series starting 2007:11 is highly stationary, but peculiar, with an associated constant WNDR that is negative and statistically different from zero; and the two sub-series beginning 1990:12 and 1994:05 have stationary attributes, yet possess constant terms that are slightly positive but not statistically different from zero, thus providing modest support for the total offset method.

You do not currently have access to this content.