Monetary policy and employment: Is low inflation poison for the labor market?

Abstract

"Some economists argue that if nominal wages are downwardly rigid, a certain amount of positive inflation may be necessary to ease firms' real wage adjustments in response to idiosyncratic shocks ('inflation may grease the wheels of the labor market'). New research findings, however, indicate that downward nominal wage rigidity does not provide a strong argument against low inflation targets." (Author's abstract, IAB-Doku) ((en))

Cite article

Stüber, H. & Beißinger, T. (2011): Geldpolitik und Beschäftigung: Ist niedrige Inflation Gift für den Arbeitsmarkt? (IAB-Kurzbericht 02/2011), Nürnberg, 8 p.