American Economic Review: Vol. 94 No. 4 (September 2004)
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Why Does the Cyclical Behavior of Real Wages Change Over Time?
Huang, Kevin X.D., Zheng Liu, and Louis Phaneuf. 2004. "Why Does the Cyclical Behavior of Real Wages Change Over Time?" American Economic Review, 94(4): 836-856.
The cyclical behavior of real wages has evolved from mildly countercyclical during the interwar period to modestly procyclical in the postwar era. This paper presents a general-equilibrium business-cycle model that helps explain the evolution. In the model, changes in the real wage cyclicality arise from interactions between nominal wage and price rigidities and an evolving input-output structure.
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Huang, Kevin X.D.