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A NOTE ON THE UNIQUENESS OF STEADY-STATE EQUILIBRIUM UNDER STATE-DEPENDENT WAGE SETTING

Published online by Cambridge University Press:  17 June 2020

Shuhei Takahashi
Shuhei Takahashi*
Affiliation:
Kyoto University, CIGS
*
Address correspondence to: Shuhei Takahashi, Institute of Economic Research, Kyoto University, Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501, Japan. e-mail: [email protected]. Phone: +81-75-753-7153
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Abstract

Does wage setting exhibit strategic complementarity and produce multiple equilibria? This study constructs a discrete-time New Keynesian model in which households choose the timing of their wage adjustments endogenously subject to fixed wage-setting costs. I explore steady-state equilibrium of the state-dependent wage-setting model both analytically and numerically. For reasonable parameter values, complementarity in wage setting is weak and the steady-state equilibrium is unique.

Keywords

State-dependent Wage SettingNew Keynesian ModelMultiple EquilibriaStrategic Complementarity
Type
Note
Information
Macroeconomic Dynamics , Volume 26 , Issue 2 , March 2022 , pp. 533 - 544
Copyright
© Cambridge University Press 2020

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Footnotes

I would like to thank William A. Barnett (the editor), two referees, and seminar and conference participants at the AEI Joint Workshop, Kobe University, China Meeting of the Econometric Society, International Conference on Computing in Economics and Finance, Australasian Meeting of the Econometric Society, Tohoku University, and European Meeting of the Econometric Society for their comments. I gratefully acknowledge financial support from Grant-in-Aid for Young Researchers (B) 17K13700, Grant-in-Aid for Scientific Research (B) 16H03626, Grant-in-Aid for Scientific Research (A) 16H02026, and the Zengin Foundation for Studies on Economics and Finance. Any errors are my own.

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