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Finance and Economics Discussion Series
The Finance and Economics Discussion Series logo links to FEDS home page Efficiency Wages, Nominal Rigidities, and the Cyclical Behavior of Real Wages and Marginal Cost
Michael T. Kiley

Abstract: This paper presents a model in which efficiency wages generate acyclical real wages but do not lower the sensitivity of marginal cost to output or increase price stickiness. Consideration of previous models suggests that efficiency wages are a poor source of real rigidity.

Keywords: Efficiency wages, nominal price rigidity

Full paper (20 KB PDF) | Full paper (53 KB Postscript)

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Last update: July 16, 1997