An efficiency wage - imperfect information model of the aggregate supply curve

Carl Campbell (carlcamp@niu.edu)

MPRA Paper from University Library of Munich, Germany

Abstract: This study derives a reduced-form equation for the aggregate supply curve from a model in which firms pay efficiency wages and workers have imperfect information about average wages at other firms. If specific assumptions are made about workers’ expectations of average wages and about aggregate demand, the model predicts how the aggregate demand and supply curves shift and how output and prices adjust in response to demand shocks and supply shocks. The model also provides an alternative explanation for Lucas’ (1973) finding that the AS curve is steeper in countries with greater inflation variability.

Keywords: Aggregate supply curve; efficiency wages; imperfect information (search for similar items in EconPapers)
JEL-codes: E10 E32 J41 (search for similar items in EconPapers)
Date: 2009-05-18
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:15296

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