Erschienen:
Cambridge, Mass: National Bureau of Economic Research, February 2010
Erschienen in:NBER working paper series ; no. w15762
Umfang:
1 Online-Ressource
Sprache:
Englisch
DOI:
10.3386/w15762
Identifikator:
Reproduktionsnotiz:
Hardcopy version available to institutional subscribers
Entstehung:
Anmerkungen:
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Mode of access: World Wide Web
Beschreibung:
In the presence of downward nominal wage rigidities, wage setters take into account the future
consequences of their current wage choices, when facing both idiosyncratic and aggregate shocks. We derive a closed-form solution for a long-run Phillips curve which relates average output gap to average wage inflation: it is virtually vertical at high inflation and flattens at low inflation. Macroeconomic volatility shifts the curve outward and reduces output. The results imply that stabilization policies play an important role, and that optimal inflation may be positive and differ across countries with different macroeconomic volatility