Staggered Wage-Setting and Output Persistence

University of Aarhus Dept. of Economics WP 1998-14

Posted: 9 Jan 1999

See all articles by Torben M. Andersen

Torben M. Andersen

University of Aarhus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: 1998

Abstract

Persistent real effects of nominal shocks is considered in an intertemporal macromodel with capital accumulation and staggered nominal wage contracting. By placing the contracting process in a setting of imperfect competition it becomes possible to avoid the standard problem that intertemporal business cycle models generate plausible business cycle fluctuations only by assuming implausible large labor supply elasticities. It is shown that nominal shocks can have persistent real effects and that nominal propagation via staggered nominal wage contracts substantially strengthens the persistency in the adjustment process for real output caused by real mechanisms like capital accumulation.

JEL Classification: E32

Suggested Citation

Andersen, Torben M., Staggered Wage-Setting and Output Persistence (1998). University of Aarhus Dept. of Economics WP 1998-14, Available at SSRN: https://ssrn.com/abstract=133308

Torben M. Andersen (Contact Author)

University of Aarhus - Department of Economics ( email )

University Park
Building 322
DK-8000 Aarhus C
Denmark
+45 8 942 1609 (Phone)
+45 8 613 6334 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
350
PlumX Metrics