We introduce a form of downward nominal wage rigidity that can vary in intensity across a continuum of labor varieties. The model delivers a static wage Phillips curve linking current wage inflation to current unemployment. For standard parameterizations, the dynamics of the model are...

This paper studies people's understanding of inflation--their perceived causes, consequences, trade-offs--and the policies supported to mitigate its effects. We design a new, detailed online survey based on the rich existing literature in economics with two experimental components--a conjoint...

The recent shift to remote work raised the amenity value of employment. As compensation adjusts to share the amenity-value gains with employers, wage-growth pressures moderate. We find empirical support for this mechanism in the wage-setting behavior of U.S. employers, and we develop novel...

We introduce on-the-job search frictions in an otherwise standard monetary DSGE New-Keynesian model. Heterogeneity in productivity across jobs gives rise to a job ladder. Firms Bertrand-compete for employed workers according to the Sequential Auctions protocol of Postel-Vinay and Robin (2002)....

U.S. inflation has recently surged, with inflation reaching its highest readings since the early 1980s. We examine the drivers of this rise in inflation, focusing on supply chain disruptions, labor supply constraints, and their interaction. Using a calibrated two-sector New Keynesian DSGE model...

How costly is inflation to workers? Answers to this question have focused on the path of real wages during inflationary periods. We argue that workers must take costly actions ("conflict") to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not...

This paper derives the curvature properties of the short-run Phillips curve in a class of canonical models of price-setting frictions. Contrary to conventional thinking, the Phillips curve is asymptotically horizontal for high levels of economic activity and asymptotically vertical for low...

The US and other advanced countries suffered bursts of severe inflation in 2021 and the first half of 2022, followed by declines of inflation later in 2022, in some countries. In times of high volatility of price determinants--cost and productivity--inflation can jump upward and fall downward at...

We show that, in a broad class of menu cost models, the dynamics of aggregate inflation in response to arbitrary shocks to aggregate costs are nearly the same as in Calvo models with suitably chosen Calvo adjustment frequencies. We first prove that the canonical menu cost model is first-order...

We use a unique high-frequency micro-dataset to estimate the slope of the primitive form of the New Keynesian Phillips curve, which features marginal cost as the relevant real activity variable. Our dataset encompasses product-level prices, costs, and output within the Belgian manufacturing...