The Return of the Wage Phillips Curve

Jordi Galí
Authors registered in the RePEc Author Service: Jordi Galí

No 474, Working Papers from Barcelona School of Economics

Abstract: The standard New Keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical wage equations-starting from Phillips'(1958) original work-and may thus be viewed as providing some theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate of unemployment.

Keywords: New Keynesian model; unemployment fluctuations; Staggered nominal wage setting; empirical wage equations (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 (search for similar items in EconPapers)
Date: 2015-09
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: THE RETURN OF THE WAGE PHILLIPS CURVE (2011)
Working Paper: The Return of the Wage Phillips Curve (2010)
Working Paper: The Return of the Wage Phillips Curve (2010)
Working Paper: The return of the wage Phillips curve (2010)
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