Edge, Rochelle M.; Laubach, Thomas; Williams, John C. - Federal Reserve Bank of San Francisco - 2003
This paper reexamines wage and price dynamics in response to permanent shocks to productivity. We estimate a micro …-founded dynamic general equilibrium (DGE) model of the U.S. economy with sticky wages and sticky prices using impulse responses to … for significant inertia in wages and some intrinsic inertia in nominal wage inflation. Our results provide support for the …