The Return of the Wage Phillips Curve

Galí, Jordi
Authors registered in the RePEc Author Service: Jordi Galí

No 7700, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The standard New Keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical applications--starting with the original Phillips (1958) curve--and may thus be viewed as providing some theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate of unemployment.

Keywords: New keynesian model; Staggered nominal wage setting; Unemployment fluctuations (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2010-02
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: THE RETURN OF THE WAGE PHILLIPS CURVE (2011)
Working Paper: The Return of the Wage Phillips Curve (2010)
Working Paper: The Return of the Wage Phillips Curve (2010)
Working Paper: The return of the wage Phillips curve (2010)
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