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

See all articles by Kevin X. D. Huang

Kevin X. D. Huang

Federal Reserve Bank of Philadelphia; Vanderbilt University - College of Arts and Science - Department of Economics

Zheng Liu

Federal Reserve Banks - Federal Reserve Bank of San Francisco

Louis Phaneuf

Universite du Quebec a Montreal; Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)

Date Written: December 2002

Abstract

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

Huang, Kevin X. D. and Huang, Kevin X. D. and Liu, Zheng and Phaneuf, Louis, Why Does the Cyclical Behavior of Real Wages Change Over Time? (December 2002). FRB of Kansas City Working Paper No. 02-09, Available at SSRN: https://ssrn.com/abstract=386905 or http://dx.doi.org/10.2139/ssrn.386905

Kevin X. D. Huang (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Vanderbilt University - College of Arts and Science - Department of Economics ( email )

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Zheng Liu

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )

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Louis Phaneuf

Universite du Quebec a Montreal ( email )

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