The Return of the Long-Run Phillips Curve

Dennis Snower and Liam Graham

No 3691, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper integrate microfoundations of wage staggering into a simple dynamic general equilibrium model with rational expectations. In this context we show that a permanent increase in money growth leads to a permanent increase in the rate of inflation and a permanent reduction in the level of unemployment. In short, we derive a microfounded long-run downward-sloping Phillips curve.

Keywords: inflation; Unemployment; Phillips curve; Nominal inertia; Monetary policy; Forward-looking expectations (search for similar items in EconPapers)
JEL-codes: E20 E30 E40 E50 (search for similar items in EconPapers)
Date: 2003-01
New Economics Papers: this item is included in nep-ltv and nep-mac
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Citations: View citations in EconPapers (11)

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Working Paper: The Return of the Long-Run Phillips Curve (2002)
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