Why Does the Cyclical Behavior of Real Wages Change Over Time?
FRB of Kansas City Working Paper No. 02-09
38 Pages Posted: 16 Apr 2003
Date Written: December 2002
This paper seeks to understand the evolution of the cyclical behavior of U.S. real wage rates from the interwar period to the post World War II period using a dynamic general equilibrium model that emphasizes demand-driven business cycle fluctuations. In the model, changes in the cyclical behavior of real wages arise endogenously from the interactions between nominal wage and price rigidities and an evolving input-output structure.
Keywords: Real Wage Cyclicality, Staggered Price and Wage Setting, Input-Output Structure
JEL Classification: E24, E32, E52
Suggested Citation: Suggested Citation