TY  - JOUR
AU  - Galí,Jordi
TI  - The Return of the Wage Phillips Curve
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15758
PY  - 2010
Y2  - February 2010
UR  - http://www.nber.org/papers/w15758
L1  - http://www.nber.org/papers/w15758.pdf
N1  - Author contact info:
Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat
AB  - The standard New Keynesian model with staggered wage setting is shown to imply a simple dynamic relation between wage inflation and unemployment. Under some assumptions, that relation takes a form similar to that found in empirical applications–starting with the original Phillips (1958) curve–and may thus be viewed as providing some theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate of unemployment.
ER  -