TY  - JOUR
AU  - Branson,William H.
AU  - Rotemberg,Julio J.
TI  - International Adjustment with Wage Rigidity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 406
PY  - 1979
Y2  - November 1979
UR  - http://www.nber.org/papers/w0406
L1  - http://www.nber.org/papers/w0406.pdf
N1  - Author contact info:
William H. Branson
Economics Department
341 Wallace Hall
Princeton University
Princeton, NJ  08544-1013
Tel: 609/258-6918
Fax: 609/258-6419
E-Mail: N/A user is deceased

Julio J. Rotemberg
Graduate School of Business
Harvard University, Morgan Hall
Soldiers Field
Boston, MA  02163
Tel: 617/495-1015
Fax: 617/496-5994
E-Mail: jrotemberg@hbs.edu
M1  - published as William H. Branson, Julio J. Rotemberg. "International Adjustment with Wage Rigidity," in Georges de Ménil and Robert J. Gordon, editors, "International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics" Elsevier Science Publishers B.V., 1991 (1991)

AB  - Two of the puzzling macroeconomic phenomena of the 1970s have been the persistent stagnation in Europe, and the disagreement between the U.S. and Europe on the feasibility of recovery by demand expansion. This paper develops the hypothesis that the source of both the stagnation and the policy differences is money-wage stickiness in the U.S. and real-wage stickiness in Europe and Japan. A real wage which is sticky above its equilibrium level in Europe and Japan would account for stagnation and infeasibility of recovery by demand expansion. The theoretical models are developed in both the one-commodity and two-commodity-bundle cases. The empirical results confirm that in the U.S. the nominal wage adjusts slowly toward equilibrium, while in Germany, Italy, Japan, and the U.K. the real wage adjusts slowly.
ER  -