The New Keynesian Wage Phillips Curve: Calvo vs. Rotemberg

Benjamin Born and Johannes Pfeifer

No 51, Dynare Working Papers from CEPREMAP

Abstract: We systematically evaluate how to translate a Calvo wage duration into an implied Rotemberg wage adjustment cost parameter in medium-scale New Keynesian DSGE models by making use of the well-known equivalence of the two setups at first order. We consider a wide range of felicity functions and show that the assumed household insurance scheme and the presence of labor taxation greatly matter for this mapping, giving rise to differences of up to one order of magnitude. Our results account for the inclusion of wage indexing, habit formation in consumption, and the presence of fixed costs in production.

Keywords: Wage Phillips Curve; Wage stickiness; Rotemberg; Calvo (search for similar items in EconPapers)
JEL-codes: E10 E30 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-10
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: THE NEW KEYNESIAN WAGE PHILLIPS CURVE: CALVO VS. ROTEMBERG (2020)
Working Paper: The New Keynesian Wage Phillips Curve: Calvo vs. Rotemberg (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cpm:dynare:051

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