Staggered Wages and Output Dynamics under Disinflation

Guido Ascari and Neil Rankin

No 269328, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages. The money wage is fixed for two periods, and is chosen according to intertemporal optimisation. Agents have labour market monopoly power. We show that the introduction of microfoundations helps to resolve the puzzle raised by directly postulated models, namely that disinflation in staggered pricing models causes a boom. In our model disinflation, whether unanticipated or anticipated, unambiguously causes a slump.

Keywords: Financial Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 38
Date: 2000-03-03
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Related works:
Journal Article: Staggered wages and output dynamics under disinflation (2002)
Working Paper: Staggered Wages and Output Dynamics under Disinflation (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269328

DOI: 10.22004/ag.econ.269328

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