Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/3109
Authors: 
Karanassou, Marika
Snower, Dennis J.
Year of Publication: 
2002
Series/Report no.: 
Working paper series, Department of Economics, Queen Mary College, London 478
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 Philipps curvebecomes downward-sloping and, indeed, quite flat for plausible parameter values. This paper provides an intuitive account of how this long-run Philipps curve arises.
Subjects: 
Inflation-unemployment tradeoff , wage-price staggering , monetary policy , forward- and backward looking wage-price behavior
JEL: 
J3
E2
E5
E3
Document Type: 
Working Paper

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