1.

Record Nr.

UNINA9910788344003321

Autore

Ricci Luca

Titolo

The Inflation-Unemployment Trade-off at Low Inflation / / Luca Ricci, Pierpaolo Benigno

Pubbl/distr/stampa

Washington, D.C. : , : International Monetary Fund, , 2009

ISBN

1-4623-6688-0

1-4527-5915-4

1-282-84256-0

1-4518-7181-3

9786612842566

Descrizione fisica

1 online resource (48 p.)

Collana

IMF Working Papers

Altri autori (Persone)

BenignoPierpaolo

Disciplina

338.495

Soggetti

Unemployment - Effect of inflation on

Inflation (Finance)

Inflation

Labor

Price Level

Deflation

Wages, Compensation, and Labor Costs: General

Unemployment: Models, Duration, Incidence, and Job Search

Wage Level and Structure

Wage Differentials

Labour

income economics

Macroeconomics

Wages

Wage rigidity

Unemployment

Unemployment rate

Prices

United States

Lingua di pubblicazione

Inglese

Formato

Materiale a stampa

Livello bibliografico

Monografia

Note generali

Description based upon print version of record.



Nota di bibliografia

Includes bibliographical references.

Nota di contenuto

Contents; 1. Introduction; 2. Overview of the Literature on Downward Wage Rigidities; 3. The Model; 4. Flexible Wages; 5. Downward Nominal Wage Rigidity; Figures; Figure 1; 6. The Phillips Curve; 6.1. Long-run Phillips Curve; Figure 2; Table 1; 6.2. Short-run Phillips Curve; 6.3. Varying the Degree of Downward Rigidities; Figure 3; Figure 4; 7. Implications for Long-run Inflation and Unemployment Volatilities; Figure 5; Figure 6; Figure 7; Figure 8; 8. Conclusions; References; A. Appendix; A.1 Derivation of Conditions; A.2 Adding the Employment Constraint

Sommario/riassunto

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.