The Changing Cyclical Behavior of Wages and Prices: 1890-1976

摘要: The persistence of inflation during periods high unemployment poses the central problem for macroeconomic policy in coming years. extent success reducing both and will depend strongly on short-run responsiveness wage to excess capacity. This paper studies changes cyclical from 1890-1976, concludes that a given shortfall production relative potential now "buys" smaller reduction rate than past. From 1890-1929, one percent decline industrial reduced about .45%; 1950-1976, same output is estimated slow only .l%. analysis makes use two methods study changing behavior inflation. Following an innovative by Cagan, calculations are made price before after eighteen business cycle peaks. While slows almost every recession, declines recent years less pronounced earlier, even when controlling severity. In second section study, econometric evidence provided also supports hypothesis increasing rigidity Inflation over cycle. last paper, some possible reasons cited declining unemployment. Ironically, successful might be part responsible. To activist breaks link between current expectations future unemployment, it argued, today not induce cuts contracts periods. Also, tremendous increase duration coverage collective bargaining agreements suggested as important force behind shifting wages prices period study.