Replication data for: The Inflation-Output Trade-Off with Downward Wage Rigidities
Principal Investigator(s): View help for Principal Investigator(s) Pierpaolo Benigno; Luca Antonio Ricci
Version: View help for Version V1
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Project Citation:
Benigno, Pierpaolo, and Ricci, Luca Antonio. Replication data for: The Inflation-Output Trade-Off with Downward Wage Rigidities. Nashville, TN: American Economic Association [publisher], 2011. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-11. https://doi.org/10.3886/E112435V1
Project Description
Summary:
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The macroeconomic implications of downward nominal wage rigidities
are analyzed via a dynamic stochastic general equilibrium model
featuring aggregate and idiosyncratic shocks. A closed-form solution
for a long-run Phillips curve relates average output gap to average
wage inflation: it is virtually vertical at high inflation and flattens
at low inflation. Macroeconomic volatility shifts the curve outwards
and reduces output. The results imply that stabilization policies play
an important role, and that optimal inflation may be positive and differ
across countries with different macroeconomic volatility. Results
are robust to relaxing the wage constraint, for example, when large
idiosyncratic shocks arise. (JEL E23, E24, E31, E63)
Scope of Project
JEL Classification:
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E23 Macroeconomics: Production
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E31 Price Level; Inflation; Deflation
E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
E23 Macroeconomics: Production
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E31 Price Level; Inflation; Deflation
E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
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