Title of article :
Evaluatingtheeconomicsignificanceofdownwardnominal
wagerigidity
Author/Authors :
Michael W.L.Elsby، نويسنده ,
Issue Information :
روزنامه با شماره پیاپی سال 2008
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
Journal title :
Journal of Monetary Economics
