The Role of Real Wage Rigidity and Labor Market Frictions for Inflation Persistence

Kai Christoffel and Tobias Linzert

Journal of Money, Credit and Banking, 2010, vol. 42, issue 7, 1435-1446

Abstract: We analyze the transmission mechanism of wages to inflation within a New Keynesian business cycle model with wage rigidities and labor market frictions. Our main focus is on the channel of real wage rigidities on inflation persistence for which we find the specification of the wage bargaining process to be of crucial importance. Under the standard efficient Nash bargaining, the feedback of wage rigidities on inflation is ambiguous and depends on other labor market variables. However, under the alternative right-to-manage bargaining we find that more rigid wages translate directly into more persistent movements of aggregate inflation. Copyright (c) 2010 The Ohio State University.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (50)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:mcb:jmoncb:v:42:y:2010:i:7:p:1435-1446

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().