Staggered wages, inflation, and discounting

Patricia Bonini () and Sergio Da Silva

MPRA Paper from University Library of Munich, Germany

Abstract: In the literature of staggered wages (Taylor, 1979, 1980; Blanchard, 1986; Ball and Cecchetti, 1991) the discount factor is neglected in the workers’ loss function. Yet discounting is to be viewed as an extra piece of micro-foundation with implications for discretionary monetary policy. We revisit the issue and show that discounting in the model of staggered wages actually lowers the time consistent steady inflation.

Keywords: Staggered wage model; Time consistent steady inflation; Discounting (search for similar items in EconPapers)
JEL-codes: E12 E31 E52 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1979

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