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Staggered wages and output dynamics under disinflation

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Ascari, Guido and Rankin, Neil (2000) Staggered wages and output dynamics under disinflation. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.557).

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Abstract

We study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages. The money wage is fixed for two periods, and is chosen according to intertemporal optimisation. Agents have labour market monopoly power. We show that the introduction of microfoundations helps to resolve the puzzle raised by directly postulated models, namely that disinflation in staggered pricing models causes a boom. In our model disinflation, whether unanticipated or anticipated, unambiguously causes a slump.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HD Industries. Land use. Labor

Divisions:

Faculty of Social Sciences > Economics

Library of Congress Subject Headings (LCSH):

Deflation (Finance), Wages -- Effect of inflation on, Production standards, Equilibrium (Economics)

Series Name:

Warwick economic research papers

Publisher:

University of Warwick, Department of Economics

Place of Publication:

Coventry

Official Date:

March 2000

Dates:

Date	Event
March 2000	Published

Number:

No.557

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Funder:

Fifth Framework Programme (European Commission) (FP5), Københavns universitet. Økonomiske institut (KU)

Grant number:

ERBFMBICT961073 (FFP)

References:

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