Patterns of Nominal and Real Wage Rigidity
45 Pages Posted: 26 Oct 2009
Date Written: October 28, 2008
We study the distortions that downward nominal and real wage rigidity would induce to a flexible form of a notional, rigidity-free, distribution of wage change using the histogram-location approach. We examine alternative methods of generating the histograms that support the econometric search for rigidity distortions and implement our approach to inflation sub-periods that should be characterised by different patterns of nominal and real rigidities. We establish the general applicability of the approach to these sub-periods and find results consistent with expectations.
Keywords: real, nominal wage rigidities
JEL Classification: J52, J31
Suggested Citation: Suggested Citation