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- W3152316401 abstract "Recent developments in macroeconomics resurrect the view that welfare costs of inflation arise because the latter acts as a tax on money balances. Empirical contributions show that wage re-negotiations take place while expiring contracts are still in place. Bringing these seemingly unrelated aspects together in a stylized general equilibrium model, we find a disciplining effect of a positive inflation target on the wage markup and identify a long-term trade-off between inflation and output. This has important policy implications, ranging from the opportunity of revising the target in response to shocks, to the possibility of exploiting inflation as a tool to increase tax revenues via its employment- enhancing effect." @default.
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- W3152316401 date "2011-10-01" @default.
- W3152316401 modified "2023-09-27" @default.
- W3152316401 title "Trend inflation, the labor market wedge, and the non-vertical Phillips curve" @default.
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