Working Paper

Return of the Long-Run Phillips Curve

This paper integrate microfoundations of wage staggering into a simple dynamic general equilibrium model with rational expectations. In this context we show that a permanent increase in money growth leads to a permanent increase in the rate of inflation and a permanent reduction in the level of unemployment. In short, we derive a microfounded long-run downward-sloping Phillips curve.


Liam Graham


Publication Date
JEL Classification
E20, E30, E40, E50