Journal ArticleDOI
The Wage Price Spiral
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In this paper, the authors show that after an increase in aggregate demand, the process of adjustment of nominal prices and nominal wages results from attempts by workers to maintain or increase their real wage and by firms maintaining or increasing their markups of prices over wages.Abstract:
This paper rehabilitates the old wage price spiral. It shows that, after an increase in aggregate demand, the process of adjustment of nominal prices and nominal wages results from attempts by workers to maintain or increase their real wage and by firms to maintain or increase their markups of prices over wages. Under continuous price and wage setting, the process of adjustment would be instantaneous; under staggering of price and wage decisions, the adjustment takes time. The more inflexible real wages and markups are to shifts in demand, the higher is the degree of price level inertia, and the longer lasting are the effects of aggregate demand on output.read more
Citations
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What Is New-Keynesian Economics?
TL;DR: In this article, the etymology of the phrase "new-Keynesian" was established and two anonymous referees for comments on one or more earlier drafts of the paper were provided.
Journal ArticleDOI
Staggered price-setting, staggered wage-setting, and business cycle persistence
Kevin X. D. Huang,Zheng Liu +1 more
TL;DR: In this article, the authors distinguish the two mechanisms in a dynamic stochastic general equilibrium framework and show that a key parameter governing persistence is linked to the underlying preferences and technologies in different ways.
Journal ArticleDOI
Capital formation and unemployment
TL;DR: The authors criticizes the current enthusiasm for labour market policies as the main route to employment creation in OECD countries and argues that such policies are normally seen as a means of encouraging more employment on existing capital stock and downplays the equally important task of increasing productive capacity.
Posted Content
On the Transmission of Monetary Policy Shocks
TL;DR: In this paper, a dynamic general equilibrium model is proposed to explain the observed output persistence and the evolving nature of real wage cyclicality, which can explain how the real wage can change from being countercyclical or acyclical to being procyclical as the input-output structure becomes more sophisticated.
Book
The Econometrics of Macroeconomic Modelling
TL;DR: In this paper, the Norwegian main-course model and the New Keynesian Phillips curve are used to model the distribution of wage bargaining and price setting in large scale macromodels.
References
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Journal ArticleDOI
Aggregate Dynamics and Staggered Contracts
TL;DR: In this article, the authors show that staggered wage contracts as short as 1 year are capable of generating the type of unemployment persistence which has been observed during postwar business cycles in the United States.
Posted Content
The Production and Inventory Behavior of the American Automobile Industry
TL;DR: In this article, the authors present an empirical study of the behavior of inventories in the automobile industry and find that inventory behavior is well explained by the assumption of intertemporal optimization with rational expectations.
Book ChapterDOI
A Survey of Inflation Theory
TL;DR: The authors present a survey of Neo-orthodoxies, including restatements, which is more of a guide through chaos than a history of received doctrine or a systematic critique of a few rival positions.
Journal ArticleDOI
Relative Wages and the Rate of Inflation
TL;DR: In this paper, a price-price inflation and a wage-wage inflation are discussed and a general equilibrium is established for the two types of inflations and general equilibrium for general equilibrium.