The Most Beautiful Variations on Fair Wages and the Phillips Curve.

Material TypeArticleLanguageEnglish
TitleThe Most Beautiful Variations on Fair Wages and the Phillips Curve. Author(S)ANDREA VAONA, (Author)
Abstract  This paper explores the connection between inflation and unemployment in two different models with fair wages in both the short and the long runs. Under customary assumptions regarding the sign of the parameters of the effort function, more inflation lowers the unemployment rate, albeit to a declining extent. This is because firms respond to inflation—which spurs effort by decreasing the reference wage—by increasing employment, thus maintaining the effort level constant as implied by the Solow condition. A stronger short-run effect of inflation on unemployment is produced under varying as opposed to fixed capital, given that in the former case the boom produced by a monetary expansion is reinforced by an increase in investment. ...Paginationp 1069-1084
SubjectEconomicsDescriptorsBanks and banking
Journal TitleJournal of Money, Credit, and Banking  
Permanent Linksclick here