Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33405
Authors: 
Linzert, Tobias
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1699
Abstract: 
This paper analyzes the relationship between unemployment and wage inflation for 10 of the euro area countries. The combination of low wage inflation and high unemployment in Europe is usually attributed to a rise in the natural rate of unemployment. Using a panel data approach, this paper models directly the specific structural determinants of the natural rate of unemployment that may account for a changing pattern in the unemployment inflation trade-off. Moreover, it analyzes whether the responsiveness of wages crucially depends on the level of inflation and the level of unemployment. This allows to detect possible downward rigidity of wages and grease or sand effects of positive levels of inflation.
Subjects: 
Phillips Curve
unemployment
panel analysis
JEL: 
E24
E31
J64
C23
Document Type: 
Working Paper

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