Fixing the Phillips Curve: The Case of Downward Nominal Wage Rigidity in the US

Research, Preprint OPEN
Stefan Reitz; Ulf. D. Slopek; (2012)
  • Publisher: Kiel Institute for the World Economy (IfW) Kiel
  • Subject: wage rigidities | E52 | E32 | E24 | stochastic frontier model | Wage rigidities; inflation dynamics; stochastic frontier model | inflation dynamics
    • jel: jel:E32 | jel:E52 | jel:E24
      ddc: ddc:330

Whereas microeconomic studies point to pronounced downward rigidity of nominal wages in the US economy, the standard Phillips curve neglects such a feature. Using a stochastic frontier model we find macroeconomic evidence of a strictly nonnegative error in an otherwise ... View more
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