A l'abri des chateaux forts du moyen-age 120296 by Pernoud+Brochard

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Example text

Money wages have not, however, remained constant. Historical data show considerable long run fluctuations in prices and wages as well as episodes of high inflation. But persistent - and apparently accelerating inflation in the postwar period brought the question of money wages into sharper focus. Phillips' (1958) study at fIrst seemed to provide an answer. Using UK data for the period 1861-1957 Phillips showed the existence of an inverse relation between wage inflation and the rate of unemployment.

Inflation, Unemployment, Distribution of Income 39 The second proposition suggests that an assumption of fixed money wages may be a useful theoretical simplification and from the point of view of employment theory the assumption is, in any case, harmless as long as the first proposition holds. Money wages have not, however, remained constant. Historical data show considerable long run fluctuations in prices and wages as well as episodes of high inflation. But persistent - and apparently accelerating inflation in the postwar period brought the question of money wages into sharper focus.

We see that sufficient conditions for an upward sloping supply curve are: i) 1J, < 0, ii) O"r < 1 and iii) Q < 1. e. output supplied goes down if product wages increase. The coefficient O"r measures the elasticity of the real wage ( ~ ) with respect to producer prices relative to consumer prices ( ~ ). If this elasticity is zero it means that Macroeconomic Theory 28 an increase in producer prices does not affect the real wage and hence the product wage (~ ) falls proportionally to the increase in the producer prices.

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