Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/99151
Authors: 
Lunardelli, Andre
Year of Publication: 
2014
Series/Report no.: 
Economics Discussion Papers 2014-32
Abstract: 
Following Driscoll and Holden (2004), I model forward-looking workers who consider it unfair if a wage adjustment fails to match past inflation. However, the present paper proposes a much larger effect by using the job finding rate as the measure of workers' opportunities outside the firm rather than the unemployment rate, develops a dynamic model with imperfect monitoring, and simulates a credible gradual disinflation with a large sacrifice ratio. It also uses the model to discuss real adverse shocks, the manner in which indexation is used in New Keynesian models, and the use of sticky information to explain disinflation costs.
Subjects: 
inflation persistence
reciprocity
indexation
Phillips curve
coordination failure
asymmetric effects of monetary policy
JEL: 
D03
E31
E32
E42
E50
J64
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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