The Return of the Wage Phillips Curve

Jordi Galí

No 15758, NBER Working Papers from National Bureau of Economic Research, Inc

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 applications-starting with the original Phillips (1958) curve-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.

JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2010-02
New Economics Papers: this item is included in nep-cba, nep-lab and nep-mac
Note: EFG ME
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Citations: View citations in EconPapers (13)

Published as Jordi Galí, 2011. "The Return Of The Wage Phillips Curve," Journal of the European Economic Association, John Wiley & Sons, Ltd., vol. 9(3), pages 436-461, 06.

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Related works:
Working Paper: The Return of the Wage Phillips Curve (2015)
Journal Article: THE RETURN OF THE WAGE PHILLIPS CURVE (2011)
Working Paper: The Return of the Wage Phillips Curve (2010)
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