NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Wage Price Spiral

Olivier J. Blanchard

NBER Working Paper No. 1771
Issued in December 1985
NBER Program(s):   EFG

This paper rehabilitates the old wage price spiral. It shows that, after an increase in aggregate demand, the process of adjustment of nominal prices and nominal wages results from attempts by workers to maintain or increase their real wage and by firms to maintain or increase their markups of prices over wages. Under continuous price and wage setting, the process of adjustment would be instantaneous ; under staggering of price and wage decisions, the adjustment takes time. The more inflexible real wages and markups are to shifts in demand, the higher is the degree of price level inertia, the longer lasting are the effects of aggregate demand on output.

download in pdf format
   (403 K)

download in djvu format
   (215 K)

email paper

This paper is available as PDF (403 K) or DjVu (215 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Blanchard, Olivier J. "The Wage Price Spiral," Quarterly Journal of Economics, Vol. 101, No. 406, pp. 545-565, August 1986.

Users who downloaded this paper also downloaded these:
Blanchard w0900 Price Asynchronization and Price Level Inertia
Blinder and Rudd The Supply-Shock Explanation of the Great Stagflation Revisited
Mishkin w1453 The Causes of Inflation
Blanchard and Quah w2737 The Dynamic Effects of Aggregate Demand and Supply Disturbances
Gordon w2070 Productivity, Wages, and Prices Inside and Outside of Manufacturing in the U.S., Japan, and Europe
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us