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Title:An anatomy of the Phillips curve PDF Logo
Authors:Snower, Dennis J.
Karanassou, Marika
Issue Date:2002
Series/Report no.:IZA Discussion paper series 635
Abstract:The paper examines how the long-run inflation-unemployment tradeoff depends on the degree to which wage-price decisions are backward- versus forward-looking. When economic agents, facing time-contingent, staggered nominal contracts, have a positive rate of time preference, the current wage and price levels depend more heavily on past variables (e.g. past wages and prices) than on future variables. Consequently, the long-run Phillips curve becomes downward-sloping and, indeed, quit flat for plausible parameter values. This paper provides an intuitive account of how this long-run Phillips curve arises.
Subjects:inflation-unemployment tradeoff
wage-price staggering
monetary policy
forward- and backward-looking wage-price behavior
traditional and New Phillips curve
JEL:J3
E2
E3
E5
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
Publikationen von Forscherinnen und Forschern des IfW

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