the special case in which prices are sticky and wages are perfectly flexible. When the model is calibrated to exhibit an …

-optimal equilibrium that would occur under completely flexible wages and prices; that is, the model exhibits a tradeoff between … stabilizing the output gap, price inflation, and wage inflation. The Pareto optimum is attainable only if either wages or prices …

This paper analyzes the dynamics of prices and wages using a limited information approach to estimation. I estimate a … two-equation model for the determination of prices and wages derived from an optimization-based dynamic model in which … both goods and labor markets are monopolistically competitive; prices and wages can be reoptimized only at random intervals …

earlier research into this question and finds little support for the view that higher wages cause higher prices. On the … contrary, more evidence is found for higher prices leading to wage growth. …