Optimal inflation rate and fair wage
Université Libre de Bruxelles
New Keynesian model with fair wage where workers' effort depends on change in nominal wage; Calvo price stickiness; capital accumulation; labor-augmented productivity growth
intermediate firms: monopolistic competition with Calvo pricing; final firms: perfect competition with CES aggregation
Table 1
Middle effort effect (γ=1/2), medium price stickiness (ξd=0.5), low growth (zA=1.02)