Monetary Policy When Wages are Downwardly Rigid: Friedman Meets Tobin

27 Pages Posted: 6 Feb 2010

See all articles by Jinill Kim

Jinill Kim

Korea University

Francisco J. Ruge-Murcia

McGill University - Department of Economics; University of Montreal - Department of Economics; University of Montreal - Center for Interuniversity Research in Econometrics

Date Written: December 2009

Abstract

In a monetary economy with downwardly rigid wages, the central banker should target a low, but strictly positive, inflation rate.

Keywords: Downward nominal wage rigidity, Asymmetric effects of monetary policy, Optimal inflation, Nonlinear dynamics

JEL Classification: E4, E5

Suggested Citation

Kim, Jinill and Ruge-Murcia, Francisco J., Monetary Policy When Wages are Downwardly Rigid: Friedman Meets Tobin (December 2009). Available at SSRN: https://ssrn.com/abstract=1548066 or http://dx.doi.org/10.2139/ssrn.1548066

Jinill Kim

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701

Francisco J. Ruge-Murcia (Contact Author)

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
Canada

University of Montreal - Department of Economics ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

University of Montreal - Center for Interuniversity Research in Econometrics ( email )

C.P. 6128, Succursale Centre-ville
Montreal, Quebec H3C 3J7
Canada