The Responses of Wages and Prices to Technology Shocks

@inproceedings{Edge2003TheRO,
  title={The Responses of Wages and Prices to Technology Shocks},
  author={Marc Edge and Thomas Laubach and John C. Williams},
  year={2003}
}
This paper reexamines wage and price dynamics in response to permanent shocks to productivity. We estimate a micro-founded dynamic general equilibrium (DGE) model of the U.S. economy with sticky wages and sticky prices using impulse responses to technology and monetary policy shocks. We utilize a flexible specification for wageand price-setting that allows for the sluggish adjustment of both the levels of these variables—as in standard contracting models—as well as intrinsic inertia in wage and… CONTINUE READING

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