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Heterogeneous Downward Nominal Wage Rigidity : Foundations of a Static Wage Phillips Curve
Schmitt-Grohé, Stephanie; Uribe, Martín - National Bureau of Economic Research - 2022
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...
Persistent link: https://www.econbiz.de/10013477266
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The Active Role of the Natural Rate of Unemployment during Cyclical Recoveries
Hall, Robert Ernest; Kudlyak, Marianna - National Bureau of Economic Research - 2023
We propose that the natural rate of unemployment has an active role in the business cycle, in contrast to the prevailing view that the rate is essentially constant. We demonstrate that this tendency to treat the natural rate as near-constant would explain the surprisingly low slope of the...
Persistent link: https://www.econbiz.de/10014436979
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Inflation and Real Activity over the Business Cycle
Bianchi, Francesco; Nicolò, Giovanni; Song, Dongho - National Bureau of Economic Research - 2023
We study the relation between inflation and real activity over the business cycle. We employ a Trend-Cycle VAR model to control for low-frequency movements in inflation, unemployment, and growth that are pervasive in the post-WWII period. We show that cyclical fluctuations of inflation are...
Persistent link: https://www.econbiz.de/10014247995
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The Unemployment-Inflation Trade-off Revisited : The Phillips Curve in COVID Times
Crump, Richard K.; Eusepi, Stefano; Giannoni, Marc Paolo; … - National Bureau of Economic Research - 2022
We estimate the natural rate of unemployment, often referred to as u*, in the United States using data on labor market flows, short-term and long-term inflation expectations and a forward-looking New-Keynesian Phillips curve for the 1960-2021 period. The natural rate of unemployment was at...
Persistent link: https://www.econbiz.de/10012938754
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Transfers, Taxes, and the NAIRU
Hamermesh, Daniel S. - 1980
Just as war is too important to be left to the generals, the impact of taxes and transfers on the aggregate unemployment rate is too important to be left to the macroeconomists. I therefore subject the issue of how tax and transfer policy affects unemployment and aggregate supply to a detailed,...
Persistent link: https://www.econbiz.de/10012478587
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Why Inflation Rose and Fell : Policymakers' Beliefs and US Postwar Stabilization Policy
Primiceri, Giorgio - 2005
This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation in the early 1980s, which standard macroeconomic models have difficulties in addressing. I present a model in which rational policymakers learn about the behavior of the economy...
Persistent link: https://www.econbiz.de/10012467538
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Sticky Information : A Model of Monetary Nonneutrality and Structural Slumps
Mankiw, N. Gregory - 2001
This paper explores a model of wage adjustment based on the assumption that information disseminates slowly throughout the population of wage setters. This informational frictional yields interesting and plausible dynamics for employment and inflation in response to exogenous movements in...
Persistent link: https://www.econbiz.de/10012470102
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Wage Dynamics : Reconciling Theory and Evidence
Blanchard, Olivier Jean - 1999
U.S. macroeconomic evidence shows a negative relation between the rate of change of wages and unemployment. In contrast, most theories of wage determination imply a negative relation between the level of wages and unemployment. In this paper, we ask whether one can reconcile the empirical...
Persistent link: https://www.econbiz.de/10012471883
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The Time-Varying NAIRU and its Implications for Economic Policy
Gordon, Robert J. - 1996
This paper estimates the NAIRU (standing for the Non-Accelerating Inflation Rate of Unemployment) as a parameter that … varies over time. The NAIRU is the unemployment rate that is consistent with a constant rate of inflation. Its value is … by the difference between the actual unemployment rate and the estimated NAIRU, and a set of supply shock variables. The …
Persistent link: https://www.econbiz.de/10012473103
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How Precise are Estimates of the Natural Rate of Unemployment?
Staiger, Douglas - 1996
(the 'NAIRU'). The main finding is that the NAIRU is imprecisely estimated: a typical 95% confidence interval for the NAIRU … quarterly data, and using various measures for expected inflation. This imprecision suggests caution in using the NAIRU to guide …
Persistent link: https://www.econbiz.de/10012473382