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dc.contributor.authorAhrens, Steffenen_US
dc.contributor.authorSnower, Dennis J.en_US
dc.date.accessioned2012-05-07en_US
dc.date.accessioned2012-06-15T07:39:01Z-
dc.date.available2012-06-15T07:39:01Z-
dc.date.issued2012en_US
dc.identifier.piurn:nbn:de:101:1-201204239446-
dc.identifier.urihttp://hdl.handle.net/10419/58520-
dc.description.abstractWe incorporate inequity aversion into an otherwise standard New Keynesian dynamic equilibrium model with Calvo wage contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high incomes experience guilt. The former seek to raise their income, and latter seek to reduce it. The greater the inflation rate, the greater the degree of wage dispersion under Calvo wage contracts, and thus the greater the degree of envy and guilt experienced by the workers. Since the envy effect is stronger than the guilt effect, according to the available empirical evidence, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant positive long-run relation between inflation and output (and employment), for low inflation rates. This Phillips curve relation, together with an inefficient zero-inflation steady state, provides a rationale for a positive long-run inflation rate. Given standard calibrations, optimal monetary policy is associated with a long-run inflation rate around 2 percent.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesDiscussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6302en_US
dc.subject.jelD03en_US
dc.subject.jelE20en_US
dc.subject.jelE31en_US
dc.subject.jelE50en_US
dc.subject.ddc330en_US
dc.subject.keywordinflationen_US
dc.subject.keywordlong-run Phillips curveen_US
dc.subject.keywordfairnessen_US
dc.subject.keywordinequity aversionen_US
dc.subject.stwPhillips-Kurveen_US
dc.subject.stwLohnverhandlungenen_US
dc.subject.stwGerechtigkeiten_US
dc.subject.stwNeukeynesianische Makroökonomiken_US
dc.subject.stwDynamisches Gleichgewichten_US
dc.subject.stwTheorieen_US
dc.titleEnvy, guilt, and the Phillips curveen_US
dc.typeWorking Paperen_US
dc.identifier.ppn71530643Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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