English, Article, Journal or magazine article edition: A Real Business Cycle Model of the Phillips Curve Mu–oz Rafael

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • A Real Business Cycle Model of the Phillips Curve
Author
  • Mu–oz Rafael
Physical Description
  • preprint
Notes
  • The aim of this article is to show that RBC models can account for the so-called Phillips curve. We propose an efficiency wage model in which money is introduced via a cash-in-advance constraint. Households choose how much effort to devote by comparing present real and nominal wages with past ones. This special intertemporal effort function implies wage sluggishness and a higher volatility of employment compared to standard RBC models. It also reduces a negative contemporaneous correlation between inflation and output, one of the more difficult moments to match for a cash-in-advance model. The model allows to match labor market moments and also to build up a transmission mechanism that affects employment through nominal wage growth. The model generates a Phillips curve that is able to mimic US data.
  • Efficiency wage; RBC; wage sluggishness; cash-in-advance; Phillips curve
  • RePEc:ctl:louvir:1998005
Language
  • English
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