Monetary policy and the wage inflation-unemployment tradeoff

Ricardo Duque Gabriel

European Economic Review, 2023, vol. 159, issue C

Abstract: Using newly assembled data for 18 advanced economies between 1870 and 2019, I study how monetary policy affects wage inflation and unemployment and document two key findings regarding their tradeoff. First, the wage Phillips curve displays a time-varying slope. Second, the tradeoff becomes weaker in low price inflation environments due to a stronger unemployment rate and a muted wage inflation response to monetary policy. These findings lend support to the idea that monetary policy has state-dependent effects with the central banks’ ability in exploring the tradeoff being impaired by a low price inflation environment.

Keywords: Phillips curve; Phillips multiplier; Wage inflation; Unemployment; Monetary policy; Economic history (search for similar items in EconPapers)
JEL-codes: E24 E31 E52 N10 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292123001939
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:159:y:2023:i:c:s0014292123001939

DOI: 10.1016/j.euroecorev.2023.104565

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().