Title of article
Evaluatingtheeconomicsignificanceofdownwardnominal wagerigidity
Author/Authors
Michael W.L.Elsby، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
16
From page
154
To page
169
Abstract
The existenceofdownwardnominalwagerigidityhasbeenabundantlydocumented,
but whatareitseconomicimplications?Thispaperdemonstratesthat,evenwhen
wagesareallocative,downwardwagerigiditycanbeconsistentwithweakmacro-
economiceffects.Firmshaveanincentivetocompresswageincreasesaswellaswage
cutswhendownwardwagerigiditybinds.Byneglectingcompressionofwageincreases,
previous literaturemayhaveoverstatedthecostsofdownwardwagerigiditytofirms.
Usingmicro-datafromtheUSandGreatBritain,Ifindthattheevidenceforthe
compressionofwageincreaseswhendownwardwagerigiditybinds.Accountingforthis
reduces theestimatedincreaseinaggregatewagegrowthduetowagerigiditytobe
muchclosertozero.Theseresultssuggestthatdownwardwagerigiditymaynotprovide
a strongargumentagainstthetargetingoflowinflationrates
Keywords
WagerigidityUnemploymentInflation
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846282
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