Chapter 15 Staggered price and wage setting in macroeconomics

Handbook of Macroeconomics

Volumn 1, Issue PART B, 1999, Pages 1009-1050

  Taylor, John B ^a  

^a STANFORD UNIVERSITY   (United States)

Author keywords

contract multiplier; E10; E32; expected market clearing; market clearing; monetary policy; money; monopolistic competition; staggered contracts model; staggered price and wage setting; state dependent pricing; time dependent pricing

Indexed keywords

EID: 77956774759     PISSN: 15740048     EISSN: None     Source Type: Book Series    
DOI: 10.1016/S1574-0048(99)10023-5     Document Type: Review

References (158)

1. Abraham J. Income redistribution during a disinflation. Journal of Macroeconomics 9 (1987) 203-221
2. Akerlof G.A., and Yellen J.L. How large are the losses from rules of thumb behavior in models of the business cycle. In: Brainard W., Nordhaus W., and Watts H. (Eds). Money, Macroeconomics, and Economic Policy: Essays in Honor of James Tobin (1991), MIT Press, Cambridge, MA
3. Arrow K. Toward a theory of price adjustment. In: Abramovitz M., et al. (Ed). The Allocation of Economic Resources: Essays in Honor of Bernard Francis Haley (1959), Stanford University Press, Cambridge, MA
4. unpublished paper. Ascari G. Optimizing agents, staggered wages and persistence in the real effects of money shocks (1998), University of Warwick, Stanford, CA
5. Ashenfelter O., and Card D. Time series representations of economic variables and alternative models of the labor market. Review of Economic Studies 49 (1982) 761-781
6. Azariadis C. Implicit contracts and underemployment equilibria. Journal of Political Economy 83 (1975) 1183-1202
7. June. Backus D. Exchange rate dynamics in a model with staggered wage contracts. Discussion Paper No. 561 (1984), Queen's University
8. Ball L. Externalities from contract length. American Economic Review 77 (1987) 615-629
9. Ball L. Credible disinflation with staggered price setting. American Economic Review 84 (1994) 282-289
10. Ball L., and Cecchetti S.G. Imperfect information and staggered pricing. American Economic Review 78 (1988) 999-1018
11. Ball L., and Romer D. The equilibrium and optimal timing of price changes. Review of Economic Studies 56 (1989) 179-198
12. Ball L., and Romer D. Real rigidities and the nonneutrality of money. Review of Economic Studies 57 (1990) 183-203
13. Ball L., Mankiw N.G., and Romer D. The new Keynesian economics and the output-inflation tradeoff. Brookings Papers on Economic Activity 1988 1 (1988) 1-65
14. Barro R.J. Unanticipated money growth and unemployment in the United States. American Economic Review 67 (1977) 101-115
15. Barro R.J., and Hercowitz Z. Money stock revisions and unanticipated money growth. Journal of Monetary Economics 6 (1980) 257-267
16. Benabou R., and Bismut C. Wage bargaining and staggered contracts: theory and estimation. Discussion Paper No. 8810 (1987), CEPREMAP, Paris, France
17. Bergen P.R., and Feenstra R.C. Staggered price setting and endogenous persistence. Working Paper No. 6429 (1998), NBER, Paris, France
18. ch. 21, this Handbook. Bernanke B.S., Gertler M., and Gilchrist S. The financial accelerator in a quantitative business cycle framework (1999)
19. Bhaskar V. On endogenously staggered prices. University of St. Andrews Discussion Paper Series, No. 9806 (1998), St. Andrews, Scotland
20. Blanchard O.J. Price asynchronization and price level inertia. In: Dornbush R., and Simonsen M. (Eds). Inflation, Debt, and Indexation (1983), MIT Press, Scotland 3-24
21. Blanchard O.J. Aggregate and individual price adjustment. Brookings Papers on Economic Activity 1987 1 (1987) 57-122
22. Blanchard O.J. Why does money affect output? A survey. In: Friedman B., and Hahn F. (Eds). Handbook of Monetary Economics (1990), North-Holland, Cambridge, MA 779-835
23. Blanchard O.J., and Fischer S. Lectures on Macroeconomics (1989), MIT Press, Amsterdam
24. Blanchard O.J., and Kiyotaki N. Monopolistic competition and the effects of aggregate demand. American Economic Review 77 (1987) 647-666
25. Blinder A. On sticky prices: academic theories meet the real world. In: Mankiw N.G. (Ed). Monetary Policy (1994), University of Chicago Press, Cambridge, MA 117-150
26. Blinder A.S., Canetti E.D., Lebow D.E., and Rudd J.B. Asking About Prices: a new approach to understanding price stickiness (1998), Russell Sage Foundation, Chicago, IL
27. Brayton F., Levin A., Tryon R., and Williams J.C. The evolution of macro models at the Federal Reserve Board. In: McCallum B.T., and Plosser C.I. (Eds). Carnegie-Rochester Conference Series on Public Policy 47 (1997) 43-81
28. Brunner K., Cukierman A., and Meltzer A.H. Stagflation, persistent unemployment, and the permanence of shocks. Journal of Monetary Economics 6 (1980) 467-492
29. Bryant R.C., Hooper P., and Mann C.L. Evaluating Policy Regimes: New Research in Empirical Macroeconomics (1993), Brookings Institution, New York
30. Buckle R.A., and Carlson J.A. Price duration with two-sided pricing rules. In: Oppenlander K.H., and Poser G. (Eds). Business Cycle Surveys: Forecasting Issues and Methodological Aspects (1995), Avebury, Washington, DC 99-118
31. Buiter W., and Jewitt I. Staggered wage setting with real wage relatives: variations on a theme of Taylor. The Manchester School 49 (1981) 211-228
32. Caballero R.J., and Engel E. Microeconomic rigidities and aggregate price dynamics. European Economic Review 37 (1993) 691-711
33. Calvo G.A. Staggered contracts and exchange rate policy. In: Frankel J.A. (Ed). Exchange Rates and International Macroeconomics (1982), University of Chicago Press, Aldershot
34. Calvo G.A. Staggered prices in a utility maximizing framework. Journal of Monetary Economics 12 (1983) 3-398
35. Caplin A.S., and Spulber D. Menu costs and the neutrality of money. Quarterly Journal of Economics 102 (1987) 703-725
36. Card D., and Hyslop D. Does inflation 'grease the wheels of the labor market'?. In: Romer C., and Romer D. (Eds). Reducing Inflation (1997), University of Chicago Press, Chicago, IL 71-114
37. Carlton D.W. The rigidity of prices. American Economic Review 76 (1986) 637-658
38. Carlton D.W. The theory and the facts of how markets clear: is industrial organization valuable for understanding macroeconomics?. In: Schmalensee R., and Willig R.D. (Eds). Handbook of Industrial Organization vol. 1 (1989), North-Holland, Chicago, IL 909-946
39. Cecchetti S.G. Indexation and incomes policy: a study of wage adjustment in unionized manufacturing. Journal of Labor Economics 5 (1984) 391-412
40. Cecchetti S.G. The frequency of price adjustment: a study of newsstand prices of magazines. Journal of Econometrics 31 (1986) 255-274
41. Chadha B. Is increased price inflexibility stabilizing?. Journal of Money, Credit and Banking 21 (1987) 481-497
42. revised April 1998. Chari V.V., Kehoe P.J., and McGrattan E.R. Sticky price models of the business cycle: can the contract multiplier solve the persistence problem?. Research Department Staff Report No. 217 (1998), Federal Reserve Bank of Minneapolis, Amsterdam
43. Cho J.O. Money and business cycles with one period nominal contracts. Canadian Journal of Economics 26 (1993) 638-659
44. Cho J.O., and Cooley T.F. The business cycle with nominal contracts. Economic Theory 6 (1995) 13-33
45. Christiano L.J. A method for estimating the timing interval in a linear econometric model, with application to Taylor's model of staggered contracts. Journal of Economic Dynamics and Control 9 (1985) 363-404
46. ch. 2, this Handbook. Christiano L.J., Eichenbaum M., and Evans C.L. Monetary policy shocks: What have we learned and to what end? (1999)
47. Conlon J.R., and Liu C.Y. Can more frequent price changes lead to price inertia? Nonneutralities in a state-dependent pricing context. International Economic Review 38 (1997) 893-914
48. Davis D., and Holt C.A. Price rigidities and institutional variation in markets with posted prices. Economic Theory 9 (1997) 63-80
49. De Fraja G. Staggered versus synchronized wage setting in oligopoly. European Economic Review 37 (1993) 1507-1522
50. DeLong J.B., and Summers L.H. Is increased price flexibility stabilizing?. American Economic Review 78 (1986) 1031-1044
51. unpublished paper. Dezhbakhsh H., Haug A.A., McCulloch J.H., Poonia G.S., and Wang L.-T. The statistical Phillips Curve in Taylor's staggered contracts model (1984)
52. Domberger S., and Fiebig D.G. The distribution of price changes in oligopoly. The Journal of Industrial Economics 41 (1993) 295-313
53. Domowitz I., Hubbard R.G., and Petersen B.C. Business cycles and the relationship between concentration and price-cost margins. Rand Journal of Economics 17 (1986) 1-17
54. Dornbusch R. PPP exchange rate rules and macroeconomic stability. Journal of Political Economy 90 (1982) 158-165
55. unpublished paper. Dotsey M., King R.G., and Wolman A.L. State dependent pricing and the dynamics of business cycles (1996)
56. Driskill R.A., and Sheffrin S.M. Is price flexibility destabilizing?. American Economic Review 76 (1986) 802-807
57. unpublished paper (Emory University, September 14). Dutta S., Bergen M., and Levy D. Price flexibility in channels of distribution: evidence from scanner data (1997)
58. Eden B. Time rigidities in the adjustment of price to monetary shocks: an analysis of micro data. Discussion paper No. 94.16 (1994), Bank of Israel
59. Eden B. The adjustment of prices to monetary shocks when trade is uncertain and sequential. Journal of Political Economy 102 (1994) 409-493
60. unpublished paper. Erceg C. Nominal wage rigidities and the propagation of monetary disturbances (1997), Federal Reserve Board
61. ch. 7, this Handbook. Evans G.W., and Honkapohja S. Learning dynamics (1999)
62. Fethke G., and Policano A. Wage contingencies, the patterns of negotiation and aggregate implications of alternative contract structures. Journal of Monetary Economics 14 (1984) 151-170
63. Fethke G., and Policano A. Will wage setters ever stagger decisions?. Quarterly Journal of Economics 101 (1986) 867-877
64. Fethke G., and Policano A. Monetary policy and the timing of wage negotiations. Journal of Monetary Economics 19 (1987) 87-105
65. Fischer S. Long-term contracts, rational expectations, and the optimal money supply rule. Journal of Political Economy 85 (1977) 191-205
66. Fregert K., and Jonung L. Monetary regimes and the length of wage contracts. paper presented at the 1986 Konstanz Conference (1986)
67. July 12. Friedman M. Column. Newsweek (1982) 64
68. Fuhrer J.C. Towards a compact, empirically-verified rational expectations model for monetary policy analysis. In: McCallum B., and Plosser C. (Eds). Carnegie-Rochester Conference on Public Policy 47 (1997) 197-231
69. Fuhrer J.C., and Moore G.R. Monetary policy tradeoffs and the correlation between nominal interest rates and real output. American Economic Review 85 (1995) 219-239
70. Fuhrer J.C., and Moore G.R. Inflation persistence. Quarterly Journal of Economics 110 (1995) 127-159
71. Gertler M. Long-term contracts, imperfect information, and monetary policy. Journal of Economic Dynamics and Control 3 (1981) 197-216
72. Gertler M. Imperfect information and wage inertia in the business cycle. Journal of Political Economy 90 (1982) 967-987
73. Goodfriend M., and King R.G. The new neoclassical synthesis and the role of monetary policy. In: Bernanke B.S., and Rotemberg J.J. (Eds). NBER Macroeconomics Annual (1997), MIT Press, Cambridge, MA 493-530
74. Gordon R. Output fluctuations and gradual price adjustment. Journal of Economic Literature 19 (1981) 493-530
75. Gray J.A. Wage indexation: a macroeconomic approach. Journal of Monetary Economics 2 (1976) 221-235
76. Gray J.A. On indexation and contract length. Journal of Political Economy 86 (1978) 1-18
77. unpublished paper. Gust C. Staggered price contracts and factor immobilities: the persistence problem revisited (1997), Northwestern University, Cambridge, MA
78. Hairault J.-O., and Portier F. Money, new Keynesian macroeconomics, and the business cycle. European Economic Review 37 (1993) 1533-1568
79. Ireland P.N. A small structural quarterly model for monetary policy evaluation. Carnegie-Rochester Conference Series on Public Policy 47 (1997) 83-108
80. Jeanne O. Generating real persistent effects of monetary shocks: how much nominal rigidity do we really need?. Working Paper No. 6258 (1997), NBER
81. Kashyap A.K. Sticky prices: new evidence from retail catalogues. Quarterly Journal of Economics 110 (1995) 245-274
82. unpublished paper. Kiley M.T. Staggered price setting, partial adjustment, real rigidities, and sunspots (1997), Federal Reserve Board
83. unpublished paper. Kim J. Monetary policy in a stochastic equilibrium model with real and nominal rigidities (1995), Yale University
84. Kimball M.S. The quantitative analysis of the basic neomonetarist model. Journal of Money Credit and Banking 27 (1995) 1241-1277
85. King R.G., and Wolman A.L. Inflation targeting in a St. Louis model of the 21st century. Federal Reserve Bank of St. Louis Review 78 (1996) 93-107
86. King R.G., and Wolman A.L. What should the monetary authority do when prices are sticky. In: Taylor J.B. (Ed). Monetary Policy Rules (1998), University of Chicago Press, Chicago, IL
87. Lach S., and Tsiddon D. The behavior of prices and inflation: an empirical analysis of disaggregated data. Journal of Political Economy 100 (1992) 349-389
88. (December). Lach S., and Tsiddon D. Staggering and synchronization in price-setting: evidence from multiproduct firms. American Economic Review 86 (1996) 1175-1196
89. Lau S.H.P. Aggregate pattern of time-dependent adjustment rules I: a game-theoretic analysis of staggered versus synchronized wage setting. Economic Journal 106 (1996) 1645-1658
90. January. Lau S.H.P. Aggregate pattern of time-dependent adjustment rules II: strategic complementary and endogenous nonsynchronization. Working Papers in Economics and Econometrics, No. 317 (1997), The Australian National University, Chicago, IL
91. unpublished paper. Lebow D.E., Stockton D.J., and Wascher W. Inflation, nominal wage rigidity and the efficiency of labor markets (1995), Federal Reserve Board
92. Leeper E.M., and Sims C.A. Toward a modern macroeconomic model usable for policy analysis. In: Fischer S., and Rotemberg J.J. (Eds). NBER Macroeconomics Annual (1994), MIT Press, Cambridge, MA 81-118
93. Levin A. The theoretical and empirical relevance of staggered wage contract models. Ph.D. Dissertation (1989), Stanford University, Cambridge, MA
94. December. Levin A. Monetary stabilization policy in a general equilibrium model with wage contracts. Working Paper No. 90-hyphen;43 (1990), University of California at San Diego
95. February. Levin A. The macroeconomic significance of nominal wage contract duration. Working Paper No. 91-08 (1991), University of California at San Diego
96. Levy D., Bergen M., Dutta S., and Venable R. The magnitude of menu costs: direct evidence from large U.S. supermarket chains. Quarterly Journal of Economics 114 (1997) 791-825
97. forthcoming. Levy D., Dutta S., Bergen M., and Venable R. Price adjustment at multiproduct retailers. Managerial and Decision Economics (1998)
98. Lucas D.J. Price and interest rate dynamics induced by multiperiod contracts. Working Paper (1985), Northwestern University
99. Lucas D.J. Rigid wages as a transmission mechanism for monetary shocks. Working Paper (1986), Northwestern University
100. Lucas Jr. R.E. Expectations and the neutrality of money. Journal of Economic Theory 4 (1972) 103-124
101. Lucas Jr. R.E. Some international evidence on output inflation tradeoffs. American Economic Review 63 (1973) 326-334
102. Lucas Jr. R.E. Econometric policy evaluation: a critique. Carnegie-Rochester Conference Series on Public Policy 1 (1976) 19-46
103. Lucas Jr. R.E. Nobel lecture: monetary neutrality. Journal of Political Economy 104 (1996) 661-682
104. Lucas Jr. R.E., and Woodford M. Real effects of monetary shocks in an economy with sequential purchases. Working Paper No. 4250 (1994), NBER
105. Marschak J. Economic Measurement for Policy and Prediction, Studies in econometric method, Cowles Commission for Research in Economics. Monograph No. 14 (1953), Yale University Press, New Haven, CT
106. Matsukawa S. The equilibrium distribution of wage settlements and economic stability. International Economic Review 27 (1986) 415-437
107. McCallum B.T. Macroeconomics after a decade of rational expectations: some critical issues. Federal Reserve Bank of Richmond Economic Review 68 (1982) 3-12
108. McCallum B.T. A linearized version of Lucas's neutrality model. Canadian Journal of Economics 17 (1984) 138-145
109. McCallum B.T. Robustness properties of a rule for monetary policy. Carnegie-Rochester Conference Series on Public Policy 29 (1988) 173-203
110. ch. 23, this Handbook. McCallum B.T. Issues in the design of monetary policy rules (1999)
111. McLaughlin K.J. Rigid wages?. Journal of Monetary Economics 34 (1994) 383-414
112. Mishkin F.S. Does anticipated monetary policy matter? an econometric investigation. Journal of Political Economy 90 (1982) 22-51
113. Montgomery E. A note on aggregate dynamics and staggered contracts: a test of the importance of spillover effects. Working paper 82-6 (1983), Carnegie Mellon School of Urban and Public Affairs, New Haven, CT
114. unpublished paper. Nelson E. A framework for analyzing alternative models of nominal rigidities (1997), Carnegie Mellon University
115. Ohanian L.E., and Stockman A.C. Short run effects of money when some prices are sticky. Federal Reserve Bank of Richmond Economic Review 80 (1994) 1-23
116. Okun A.M. Prices and Quantities: A Macroeconomic Analysis (1981), Brookings Institution, Washington, DC
117. Parkin M. The output-inflation tradeoff when prices are costly to change. Journal of Political Economy 94 (1986) 200-224
118. Phaneuf L. Can contract-based models explain business cycles?. working paper (1987), University of Montreal, Washington, DC
119. Phaneuf L. Propriétés dynamiques des modèles du cycle à contrats echelonnés. Canadian Journal of Economics 20 (1987) 123-139
120. Phaneuf L. Wage contracts and the unit root hypothesis. Canadian Journal of Economics 23 (1990) 580-592
121. Phelps E. Disinflation without recession: adaptive guideposts and monetary policy. Weltwirtschaftliches Archiv 114 (1978) 783-809
122. Phelps E., and Taylor J.B. Stabilizing powers of monetary policy under rational expectations. Journal of Political Economy 85 (1977) 163-190
123. Prescott E.C. Efficiency of the natural rate. Journal of Political Economy 83 (1975) 1229-1236
124. Rankin N. Nominal rigidity and monetary uncertainty. European Economic Review 42 (1998) 185-199
125. Roberts J.M. New Keynesian economics and the Phillips curve. Journal of Money, Credit and Banking 27 (1995) 975-984
126. Roberts J.M. Is inflation sticky?. Journal of Monetary Economics 39 (1997) 173-196
127. Romer D. Advanced Macroeconomics (1996), McGraw-Hill, New York
128. Rotemberg J.J. Sticky prices in the United States. Journal of Political Economy 90 (1982) 1187-1211
129. Rotemberg J.J. The new Keynesian foundations. In: Fischer S. (Ed). NBER Macroeconomics Annual 1987 (1987), MIT Press, New York 69-104
130. Rotemberg J.J. A comment. Carnegie-Rochester Conference Series on Public Policy 47 (1997) 231-243
131. Rotemberg J.J., and Woodford M. An optimization-based econometric framework for the evaluation of monetary policy. In: Bernanke B.S., and Rotemberg J.J. (Eds). NBER Macroeconomics Annual (1997), MIT Press, Cambridge, MA
132. ch. 16, this Handbook. Rotemberg J.J., and Woodford M. The cyclical behavior of prices and costs (1999)
133. In: Rotwein E. (Ed). David Hume's Writings on Economics (1955), University of Wisconsin Press, Cambridge, MA
134. Rudin J. Diverse expectations in an empirical model: an extension of the staggered contracts model, Chapter 2 of Diverse expectations: policy and empirical implications. Ph.D. Dissertation (1987), Stanford University, Madison, WI
135. Sargent T.J. A classical macroeconomic model for the United States. Journal of Political Economy 84 (1976) 207-237
136. Sargent T.J., and Wallace N. 'Rational' expectations, the optimal monetary instrument, and the optimal money supply rule. Journal of Political Economy 83 (1975) 241-254
137. July. Sheshinski E., and Weiss Y. Staggered and synchronized price polices and multiproduct monopolies. Working paper No. 24-78 (1988), Foerder Institute for Economic Research, Tel-Aviv
138. unpublished paper. Slade M.E. Optimal pricing with costly adjustment: evidence from retail-grocery prices (1996), University of British Columbia, Tel-Aviv
139. Stigler G., and Kindahl J. The Behavior of Industrial Prices. NBER General Series, No. 90 (1970), Columbia University Press, New York
140. ch. 1, this Handbook. Stock J.H., and Watson M.W. Business cycle fluctuations in US macroeconomic time series (1999)
141. Svensson L.E.O. Sticky goods prices, flexible asset prices, monopolistic competition, and monetary policy. Review of Economic Studies 52 (1986) 385-405
142. Taylor J.B. Monetary policy during a transition to rational expectations. Journal of Political Economy 83 (1975) 1009-1021
143. Taylor J.B. Estimation and control of an econometric model with rational expectations. Econometrica 47 (1979) 1267-1286
144. unpublished paper. Taylor J.B. An econometric business cycle model with rational expectations: some estimation results. condensed version reprinted in chapter 2 of Taylor (1979-1993), Columbia University, New York
145. Taylor J.B. Aggregate dynamics and staggered contracts. Journal of Political Economy 88 (1980) 1-22
146. Taylor J.B. Output and price stability: an international comparison. Journal of Economic Dynamics and Control 2 (1980) 109-132
147. Taylor J.B. Union wage settlements during a disinflation. American Economic Review 73 (1983) 981-993
148. Taylor J.B. Rational expectations models in macroeconomics. In: Arrow K., and Honkapohja S. (Eds). Frontiers of Economics (1985), Basil Blackwell, Oxford
149. Taylor J.B. Improvements in macroeconomic stability: the role of wages and prices. In: Gordon R.J. (Ed). The American Business Cycle. Continuity and Change (1986), University of Chicago Press, Oxford
150. Taylor J.B. Macroeconomic Policy in the World Economy: From Econometric Design to Practical Operation (1993), W.W. Norton, Chicago, IL
151. Taylor J.B. Discretion versus policy rules in practice. Carnegie-Rochester Conference Series in Public Policy 39 (1993) 195-214
152. Tsiddon D. On the stubborness of sticky prices. International Economic Review 32 (1991) 69-75
153. Tsiddon D. The (mis)behavior of the aggregate price level. Review of Economic Studies 60 (1993) 889-902
154. Warner E.J., and Barsky R. The timing and magnitude of retail store markdowns: evidence from weekends and holidays. Quarterly Journal of Economics 110 (1995) 321-352
155. West K.D. On the interpretation of near random-walk behavior in GNP. American Economic Review 78 (1988) 202-209
156. Woodford M. Comment on the quantitative analysis of the basic neomonetarist model. Journal of Money, Credit and Banking 27 (1995) 1277-1284
157. Yun T. Monetary policy, nominal price rigidity and business cycles. Ph.D. Dissertation (1994), Department of Economics, University of Chicago, New York
158. Yun T. Nominal price rigidity, money supply endogeneity, and business cycles. Journal of Monetary Economics 37 (1996) 345-370