Money, Sticky Wages, and the Great Depression

Money, Sticky Wages, and the Great Depression

In this paper, we quantify the role of monetary shocks operating through a sticky wage channel during the Great Depression in the US. The view that sluggish wage adjustment played a key role in accounting for the severity of the Great Depression in both the US and elsewhere has a long history. John...

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Veröffentlicht in:The American economic review 2000-12, Vol.90 (5), p.1447-1463
Hauptverfasser: Bordo, Michael D., Erceg, Christopher J., Evans, Charles L.
Format: Artikel
Sprache:eng
Schlagworte:
Economic theory
Employment
Great Depression
Industry
Keynesian theory
Modeling
Nominal wages
Price levels
Real wages
Shorter Papers
Simulations
Studies
Wage adjustments
Wages
Wages & salaries
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Zusammenfassung:In this paper, we quantify the role of monetary shocks operating through a sticky wage channel during the Great Depression in the US. The view that sluggish wage adjustment played a key role in accounting for the severity of the Great Depression in both the US and elsewhere has a long history. John Maynard Keynes (1936) and other contemporary observers of the period noted that wages were sticky and this had a negative allocative effect.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.90.5.1447