Mohou být strnulosti nominálních mezd problémem v situaci deflace způsobené hospodářským růstem?

Is Nominal Wage Rigidity a Problem in the Case of Deflation Driven by Economic Growth?

Tomáš Frömmel and Pavel Potužák

Politická ekonomie, 2020, vol. 2020, issue 3, 267-289

Abstract: This paper explores whether downward rigidity in nominal wages has negative impacts on the economy in the case of deflation caused by economic growth. In this situation, growth of real wages may be delivered by a fall in the price level even if nominal wages are constant. Hayek's proposal to stabilize MV is studied in detail. The nominal GDP is stabilized within this framework, and when potential output is growing, the price level might decrease. It is derived that this Hayekian rule would lead to a fall in nominal wages in an economy with positive population growth, which restricts the space for deflation. Friedman's proposal to stabilize prices of factors of production is also examined. It results in weaker deflation than Hayek's proposal and no need for decrease in nominal wages. The next part of the article demonstrates that the Hayekian framework may not require a fall in nominal wages in a converging economy if the labour share of income is gradually increasing, even if population growth is positive.

Keywords: deflation; nominal wages; wage rigidities; economic growth; technological progress; population growth; monetary policy; stabilization of nominal GDP; stabilization of prices of factors of production (search for similar items in EconPapers)
JEL-codes: E24 E31 E52 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.18267/j.polek.1272

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