FAIRNESS AND INFLATION PERSISTENCE

• 成果类型: Article
• 署名作者: Driscoll, John C.; Holden, Steinar
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; University of Oslo; Norges Bank
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1162/154247604323067952
• 发表日期: 2004
• 页码: 240-251
• 关键词: unemployment; satisfaction; DECISION; BEHAVIOR; DYNAMICS; range

摘要

We argue that peoples' concern for fairness may explain an unsolved puzzle in macroeconomics: the persistence of inflation. We extend a 1990 wage-contracting model of Bhaskar in which workers' disutility from being paid less than other workers exceeds their utility from being paid more. This model generates a continuum of equilibria over a range of wages and unemployment rates. If workers' expectations are based on the past behavior of wage growth, these beliefs will be self-fulfilling, generating inflation persistence within, but not outside of, this range. Based on quarterly U.S. data over the period 1955-2000, we find evidence that inflation is more persistent between unemployment rates of 4.7 and 6.5% than outside these bounds. (JEL: E31, E3, E5)