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Wage-Price Spirals

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The Labor Market and Business Cycle Theories

Part of the book series: Lecture Notes in Economics and Mathematical Systems ((LNE,volume 325))

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Abstract

In the model tLat we have considered so far, the wage-price spiral has not played a prominent role, because equilibrium situations have been considered, because only one equation has been taken into account, or because the full impact of the spiral on the nominal values of the other variables has been neglected.

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Reference

  1. On this definition, see Schinasi (1982).

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  2. On this distinction, see Ball, Mankiw, Romer (1988). On their interrelationship, see Blinder (1988).

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  3. This kind of rigidity is stressed, for instance, by Rotemberg (1987) who refers to the so called menu costs.

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  4. Akerlof and Yellen (1985) have shown that the cost of nominal rigidities to price setters can be much smaller than the macroeconomic effects. The profit loss from nonadjustment is second order, while the macro effects are first order. It is also important to stress that nominal rigidity can be justified in terms of game theory. For an attempt, see Sondermann (1988).

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  5. These studies have been criticized for assuming a fixed staggering period that is not a result of a maximization process. See McCallum (1982).

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  6. See the appendix of Blanchard (1986).

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  7. On this concept, see Rowthorn (1977). For a disaggregated analysis, see Goodwin (1987).

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  8. See Meade (1982) , Table VI, p. 167.

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  9. See Meade (1981) p. 41.

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Authors and Affiliations

  1. University of Bergamo, Via Salvecchio 19, I-24100, Bergamo, Italy

    Prof. Dr. Piero Ferri

  2. Department of Economics, Washington University, 63130, St. Louis, MO, USA

    Prof. Dr. Edward Greenberg

Authors
  1. Prof. Dr. Piero Ferri
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  2. Prof. Dr. Edward Greenberg
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© 1989 Springer-Verlag Berlin Heidelberg

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Ferri, P., Greenberg, E. (1989). Wage-Price Spirals. In: The Labor Market and Business Cycle Theories. Lecture Notes in Economics and Mathematical Systems, vol 325. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-00831-7_7

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  • DOI: https://doi.org/10.1007/978-3-662-00831-7_7

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-540-50866-3

  • Online ISBN: 978-3-662-00831-7

  • eBook Packages: Springer Book Archive

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