[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/0406.html
   My bibliography  Save this paper

International Adjustment with Wage Rigidity

Author

Listed:
  • William H. Branson
  • Julio J. Rotemberg
Abstract
Two of the puzzling macroeconomic phenomena of the 1970s have been the persistent stagnation in Europe, and the disagreement between the U.S. and Europe on the feasibility of recovery by demand expansion. This paper develops the hypothesis that the source of both the stagnation and the policy differences is money-wage stickiness in the U.S. and real-wage stickiness in Europe and Japan. A real wage which is sticky above its equilibrium level in Europe and Japan would account for stagnation and infeasibility of recovery by demand expansion. The theoretical models are developed in both the one-commodity and two-commodity-bundle cases. The empirical results confirm that in the U.S. the nominal wage adjusts slowly toward equilibrium, while in Germany, Italy, Japan, and the U.K. the real wage adjusts slowly.

Suggested Citation

  • William H. Branson & Julio J. Rotemberg, 1979. "International Adjustment with Wage Rigidity," NBER Working Papers 0406, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0406
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w0406.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Avinash Dixit, 1978. "The Balance of Trade in a Model of Temporary Equilibrium with Rationing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(3), pages 393-404.
    2. Branson, William H & Klevorick, Alvin K, 1969. "Money Illusion and the Aggregate Consumption Function," American Economic Review, American Economic Association, vol. 59(5), pages 832-849, December.
    3. Robert J. Gordon, 1977. "World Inflation and Monetary Accommodation in Eight Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(2), pages 409-478.
    4. Michael Bruno & Jeffrey Sachs, 1979. "Supply vs. Demand Approaches to the Problem of Stagflation," NBER Working Papers 0382, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2021. "European Economics and the Early Years of the International Seminar on Macroeconomics," Revue d'économie politique, Dalloz, vol. 131(4), pages 693-722.
    2. Aurélien Goutsmedt & Matthieu Renault, Francesco Sergi, 2019. "European Economics and the Early Years of the “International Seminar on Macroeconomicsâ€," Working Papers, Department of Economics 2019_50, University of São Paulo (FEA-USP).
    3. J. Peter Neary & Joseph E. Stiglitz, 1979. "Towards A Reconstruction of Keynesian Economics: Expectations and Constrained Equilibria," NBER Working Papers 0376, National Bureau of Economic Research, Inc.
    4. Aurélien Goutsmedt & Goulven Rubin, 2018. "Robert J. Gordon and the introduction of the natural rate hypothesis in the Keynesian framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01821825, HAL.
    5. Robert J. Gordon, 1991. "Productivity, Wages, and Prices Inside and Outside of Manufacturing in the U.S., Japan, and Europe," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 153-207, National Bureau of Economic Research, Inc.
    6. Maurice Obstfeld, 1995. "Intenational Currency Experience: New Lessons and Lessons Relearned," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 119-220.
    7. repec:bla:scandj:v:90:y:1988:i:2:p:189-209 is not listed on IDEAS
    8. Ogawa, Shogo, 2022. "Survey of non-Walrasian disequilibrium economic theory," MPRA Paper 115011, University Library of Munich, Germany.
    9. Jean-Paul Azam, 1982. "L'impact macroéconomique de la politique commerciale en déséquilibre : le rôle des importations de biens intermédiaires," Revue Économique, Programme National Persée, vol. 33(6), pages 1089-1114.
    10. Wolfgang Fautz, 1981. "A Simple Dynamic Model of Autonomous Wage Policy, Price Expectations, and Monetary Accommodation," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 117(I), pages 25-40, March.
    11. Richard B. Freeman, 1980. "The Evolution of the American Labor Market 1948-1980," NBER Working Papers 0446, National Bureau of Economic Research, Inc.
    12. Hasan, Mohammad S. & Taghavi, Majid, 2002. "Residential investment, macroeconomic activity and financial deregulation in the UK: an empirical investigation," Journal of Economics and Business, Elsevier, vol. 54(4), pages 447-462.
    13. Ricci, Luca Antonio, 1995. "Exchange rate regimes and location," Discussion Papers, Series II 291, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    14. Goutsmedt, Aurélien & Truc, Alexandre, 2023. "An independent European macroeconomics? A history of European macroeconomics through the lens of the European Economic Review," European Economic Review, Elsevier, vol. 158(C).
    15. Marois, William, 1986. "Théorie du déséquilibre et politique économique en économie ouverte," L'Actualité Economique, Société Canadienne de Science Economique, vol. 62(2), pages 257-288, juin.
    16. Ching-Chong Lai & Juin-Jen Chang, 2002. "Nominal versus real wage rigidity in a monopoly union: A synthesis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 61-73, March.
    17. Sung Y. Kwack, 1974. "Simulations with a model of the U.S. balance of payments: the impact of the Smithsonian exchange rate agreement," International Finance Discussion Papers 48, Board of Governors of the Federal Reserve System (U.S.).
    18. Rahmati, Mohammad Hossein & Ebrahimian, Mehran & Madanizadeh, Seyed Ali, 2021. "Dynamic effects of trade barriers with speculation on foreign currency: The case of Iran," International Economics, Elsevier, vol. 167(C), pages 151-173.
    19. George Darko & Richard Dusansky & Pankaj Maskara & Nadeem Naqvi, 2006. "The gains from trade in a small monetary economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(4), pages 403-430.
    20. Graziella Bertocchi, 2003. "Labor Market Institutions, International Capital Mobility, and the Persistence of Underdevelopment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 637-650, July.
    21. Jeffrey Sachs, 1986. "High Unemployment in Europe: Diagnosis and Policy Implications," NBER Working Papers 1830, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0406. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.