Fairness and Inflation Persistence
| Autor: | Steinar Holden, John C. Driscoll |
|---|---|
| Rok vydání: | 2004 |
| Předmět: | |
| Zdroj: | Journal of the European Economic Association. 2:240-251 |
| ISSN: | 1542-4774 1542-4766 |
| DOI: | 10.1162/154247604323067952 |
| Popis: | We argue that peoples’ concern for fairness may explain an unsolved puzzle in macroeconomics: the persistence of ine ation. We extend a 1990 wage-contracting model of Bhaskar in which workers’ disutility from being paid less than other workers exceeds their utility from being paid more. This model generates a continuum of equilibria over a range of wages and unemployment rates. If workers’ expectations are based on the past behavior of wage growth, these beliefs will be self-fule lling, generating ine ation persistence within, but not outside of, this range. Based on quarterly U.S. data over the period 1955‐ 2000, we e nd evidence that ine ation is more persistent between unemployment rates of 4.7 and 6.5% than outside these bounds. (JEL: E31, E3, E5) |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|