dynamic general equilbrium model that includes "Taylor-style" (1980) wage and price contracts can account for a substantial …

-gap variability in an optimizing-agent model with staggered nominal wage and price contracts. This variance tradeoff is absent only in … the special case in which prices are sticky and wages are perfectly flexible. When the model is calibrated to exhibit an … empirically reasonable degree of nominal wage inertia, strict inflation targeting induces substantial output-gap volatility. …

This paper develops a simple framework for examining human capital accumulation, unemployment, and relative wages in a … global economy. It builds on the models of Davis (1998a, b) of trade between a flexible-wage America and a rigid-wage Europe …, technical change, and a productivity slowdown. We derive the consequences for the skilled-to unskilled wage gap, unemployment …

nominal wages. This finding contrasts with results obtained using standard sticky-wage models, which employ Walrasian labor …Costly nominal wage adjustment has received renewed attention in the design of optimal policy. In this paper, we embed … costly nominal wage adjustment into the modern theory of frictional labor markets to study optimal fiscal and monetary policy …

utility calculations. There is a stabilization problem because there are one-period nominal contracts for wages, or prices, or … stabilization and optimal stabilization of one variable or a combination of two variables. With wage contracts, outcomes depend …, outcomes are independent of whether there are wage contracts, except, of course, for the nominal wage. …

facts on the response of industry nominal wage growth to aggregate and industry influences: ; 1. We find support for the … canonical wage contracts model outlined in Blanchard and Fischer (1989). The elasticity of response of nominal wage growth to … expected inflation is 0.7. The dasticity of nominal wage growth with respect to changes in unexpected inflation is 0.1. ; 2 …

stabilizing the output gap, price inflation, and wage inflation. The Pareto optimum is attainable only if either wages or prices … unconditional variances of the output gap, price inflation, and wage inflation. Monetary policy cannot replicate the Pareto …-optimal equilibrium that would occur under completely flexible wages and prices; that is, the model exhibits a tradeoff between …