Productivity Growth and the Phillips Curve

Laurence Ball and Robert Moffitt

No 8421, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a model in which workers' aspirations for wage increases adjust slowly to shifts in productivity growth. The model yields a Phillips curve with a new variable: the gap between productivity growth and an average of past wage growth. Empirically, this variable shows up strongly in the U.S. Phillips curve. Including it explains the otherwise puzzling shift in the unemployment-inflation tradeoff since 1995.

JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2001-08
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (130)

Published as Krueger, A. and R. Solow (eds.) The Roaring Nineties: Can Full Employment Be Sustained? Russell Sage Foundation, 2002.

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