The Inflation-Unemployment Trade-off at Low Inflation /

Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the cu...

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Détails bibliographiques
Auteur principal: Ricci, Luca
Autres auteurs: Benigno, Pierpaolo
Format: Revue
Langue:English
Publié: Washington, D.C. : International Monetary Fund, 2009.
Collection:IMF Working Papers; Working Paper ; No. 2009/034
Accès en ligne:Full text available on IMF
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245 1 4 |a The Inflation-Unemployment Trade-off at Low Inflation /  |c Luca Ricci, Pierpaolo Benigno. 
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490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the curve is virtually vertical for high inflation rates but becomes flatter as inflation declines. Second, macroeconomic volatility shifts the Phillips curve outward, implying that stabilization policies can play an important role in shaping the trade-off. Third, nominal wages tend to be endogenously rigid also upward, at low inflation. Fourth, when inflation decreases, volatility of unemployment increases whereas the volatility of inflation decreases: this implies a long-run trade-off also between the volatility of unemployment and that of wage inflation. 
538 |a Mode of access: Internet 
700 1 |a Benigno, Pierpaolo. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2009/034 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2009/034/001.2009.issue-034-en.xml  |z IMF e-Library