Universität zu Köln

Born, Benjamin and Pfeifer, Johannes (2020). THE NEW KEYNESIAN WAGE PHILLIPS CURVE: CALVO VS. ROTEMBERG. Macroecon. Dyn., 24 (5). S. 1017 - 1042. NEW YORK: CAMBRIDGE UNIV PRESS. ISSN 1469-8056

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Abstract

We systematically evaluate how to translate a Calvo wage duration into an implied Rotemberg wage adjustment cost parameter in medium-scale New Keynesian DSGE models by making use of the well-known equivalence of the two setups at first order. We consider a wide range of felicity functions and show that the assumed household insurance scheme and the presence of labor taxation greatly matter for this mapping, giving rise to differences of up to one order of magnitude. Our results account for the inclusion of wage indexing, habit formation in consumption, and the presence of fixed costs in production. We also investigate the conditional and unconditional welfare implications of the wage-setting schemes under efficient and distorted steady states.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Born, Benjamin UNSPECIFIED UNSPECIFIED UNSPECIFIED Pfeifer, Johannes UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-328482
DOI:	10.1017/S1365100518000615
Journal or Publication Title:	Macroecon. Dyn.
Volume:	24
Number:	5
Page Range:	S. 1017 - 1042
Date:	2020
Publisher:	CAMBRIDGE UNIV PRESS
Place of Publication:	NEW YORK
ISSN:	1469-8056
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language MONETARY-POLICY; STICKY WAGES; PRICES; MODEL; RIGIDITIES; SHOCKS; COSTS Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/32848