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Why does the cyclical behavior of real wages change over time?

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  • Kevin X.D. Huang
  • Zheng Liu
  • Louis Phaneuf

Abstract

This paper seeks to understand the evolution of the cyclical behavior of U.S. real wage rates from the interwar period to the post World War II period using a dynamic general equilibrium model that emphasizes demand-driven business cycle fluctuations. In the model, changes in the cyclical behavior of real wages arise endogenously from the interactions between nominal wage and price rigidities and an evolving input-output structure.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number RWP 02-09.

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Date of creation: 2002
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Handle: RePEc:fip:fedkrw:rwp02-09

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Keywords: Wages;

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