Wage Contracts and the Unit Root Hypothesis

Phaneuf, Louis

doi:10.2307/135649

Cited by 12 publications

(14 citation statements)

References 14 publications

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“…Our main ®nding is that highly persistent real effects of money shocks in staggered wage models are unlikely. Consequently, our result refutes the earlier view of West (1988) and Phaneuf (1990) for almost any reasonable values of the microeconomic parameters or underlying rate of in¯ation. First, the model log-linearised around a zero in¯ation steady state illuminates the role of the microeconomic parameters in generating persistence.…”

supporting

confidence: 88%

“…Indeed, notwithstanding the apparent simplicity of Taylor's (1979) model, it turns out that a simpli®ed case of the log-linearised version of the intertemporal model presented here exactly coincides with that of Taylor. We can then investigate whether the model can con®rm previous ®ndings by West (1988) and Phaneuf (1990).…”

mentioning

confidence: 95%

“…More recent papers by West (1988) and Phaneuf (1990) try to challenge this view. They both use Taylor's (1979Taylor's ( , 1980a staggered wage model with a monetary policy feedback rule.…”

mentioning

confidence: 99%

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Optimising Agents, Staggered Wages and Persistence in the Real Effects of Money Shocks

Ascari

2000

The Economic Journal

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In this paper we incorporate Taylor's (1979) staggered wage setting into an optimising dynamic general equilibrium framework to study whether staggered wages could induce a high degree of persistence in the real effects of money shocks. We conclude that high persistence is an unlikely outcome. Sensible values of the microeconomic parameters and/or a moderate rate of underlying inflation imply a low degree of persistence. Furthermore, once explicit microfoundations are taken into account, we show that: (i) the model is highly non‐linear; (ii) the inertia of the system is inversely related to the level of average inflation.

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supporting

confidence: 88%

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confidence: 95%

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Optimising Agents, Staggered Wages and Persistence in the Real Effects of Money Shocks

Ascari

2000

The Economic Journal

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“…The degree of persistence generated by the Taylor model has been the subject of some recent debate. West (1988) and Phaneuf (1990) argue that Taylor's model can generate a high degree of persistence, while Ascari (2000) and Chari et al (2000) suggest that this is not plausible. Bergin and Feenstra (2000) suggest a formulation of preferences which can generate greater persistence.…”

Section: Introductionmentioning

confidence: 99%

On Endogenously Staggered Prices

Bhaskar

2002

Rev Econ Studies

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Taylor's model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks. However, in standard imperfect competition models, if agents are allowed to choose the timing of pricing decisions, they will typically choose to synchronize. This paper provides a simple model of imperfect competition which produces stable staggering. Our argument relies on strategic interaction at two levels-between firms within an industries, and across industries-and produces a continuum of staggered price equilibria. These equilibria are strict, and hence stable under a simple adaptive learning process.

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“…The first step of the analysis consists in determining the eigenvalues of the polynomial equations (8)± (10) in z. West (1988) and Phaneuf (1990) considered a value of which lies between 0.05 and 0.1. As the value of !…”

Section: Simulation Resultsmentioning

confidence: 99%