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Basil Halperin on sticky wage models

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[unable to retrieve full-text content]Some of the earliest New Keynesian models featured wage stickiness. By the 1980s, NKs switched to price stickiness, which remains the standard assumption even today. Basil Halperin has an excellent essay that explains why wage stickiness is a more useful assumption for macro models. This portion of his essay caught my eye: 1. Identification: the […]

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Some of the earliest New Keynesian models featured wage stickiness. By the 1980s, NKs switched to price stickiness, which remains the standard assumption even today. Basil Halperin has an excellent essay that explains why wage stickiness is a more useful assumption for macro models. This portion of his essay caught my eye: 1. Identification: the […]
Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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