Real wage dynamics and the Phillips Curve

DC FieldValueLanguage
dc.contributor.authorWhelan, Karl-
dc.date.accessioned2008-06-16T14:24:05Z-
dc.date.available2008-06-16T14:24:05Z-
dc.date.issued1999-12-
dc.identifier.urihttp://hdl.handle.net/10197/250-
dc.description.abstractSince Friedman (1968), the traditional derivation of the accelerationist Phillips curve has related expected real wage inflation to the unemployment rate and then invoked markup pricing and adaptive expectations to generate the accelerationist price inflation equation. Blanchflower and Oswald (1994) have argued that microeconomic evidence of a low autoregression coefficient in real wage regressions invalidates this approach, a conclusion that has been disputed widely on the grounds that the true autoregression coefficient is close to one. This paper shows that the accelerationist relationship between the change in price inflation and the unemployment rate is consistent with any type of microeconomic real wage dynamics. However, these dynamics will determine how supply shocks affect inflation. Evidence on supply shocks and inflation points against the traditional real wage formulation. Implications for the recent behavior of the NAIRU are explored.en
dc.format.extent4304 bytes-
dc.format.mimetypeapplication/pdf-
dc.language.isoenen
dc.publisherFederal Reserveen
dc.relation.ispartofseriesFinance and Economics Discussion Seriesen
dc.relation.ispartofseriesNo. 2000-02en
dc.subjectPhillips curveen
dc.subjectInflationen
dc.subjectNAIRUen
dc.subject.classificationE31en
dc.subject.classificationE24en
dc.subject.lcshPhillips curveen
dc.subject.lcshWages--Effect of inflation onen
dc.subject.lcshUnemployment--Effect of inflation onen
dc.titleReal wage dynamics and the Phillips Curveen
dc.typeWorking Paperen
dc.internal.authorurlKarl Whelan (web page)en
dc.internal.authorurlhttp://www.karlwhelan.com/en
dc.internal.authorcontactotherEmail: karl.whelan@ucd.ie; Tel: 353 1 716 8239en
dc.internal.authoridUCD0026en
dc.internal.availabilityFull text availableen
dc.internal.webversionshttp://www.federalreserve.gov/pubs/feds/2000/200002/200002pap.pdfen
dc.statusNot peer revieweden
dc.neeo.contributorWhelan|Karl|aut|UCD0026-
item.grantfulltextopen-
item.fulltextWith Fulltext-
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