What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?
AbstractA recent paper has suggested there might be a trade-off between inflation and unemployment at low inflation rates and this has led some economists to recommend that Canada increase its inflation rate. Underlying this view is the idea that, because firms are reluctant to cut workers' nominal wages, a moderate amount of inflation can be used to facilitate needed reductions in real wages. This paper discusses the link from downward nominal-wage rigidity to unemployment and considers some of the issues that need to be addressed to determine whether a change in Canada's monetary policy is warranted.
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Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 97-13.
Length: 38 pages
Date of creation: 1997
Date of revision:
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Inflation targets; Monetary policy framework; Transmission of monetary policy;
Other versions of this item:
- Seamus Hogan, 1998. "What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?," Canadian Public Policy, University of Toronto Press, vol. 24(4), pages 513-525, December.
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
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