Finance and Economics Discussion Series (FEDS)
June 1997
Efficiency Wages, Nominal Rigidities, and the Cyclical Behavior of Real Wages and Marginal Cost
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.
Full paper (53 KB Postscript)Keywords: Efficiency wages, nominal price rigidity
PDF: Full Paper
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