01936cas a2200253 a 4500 AALejournalIMF005379 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451871814 1018-5941 BD-DhAAL BD-DhAAL Ricci, Luca. The Inflation-Unemployment Trade-off at Low Inflation / Luca Ricci, Pierpaolo Benigno. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Wage setters take into account the future consequences of their current wage choices in the presence of downward nominal wage rigidities. Several interesting implications arise. First, a closed-form solution for a long-run Phillips curve relates average unemployment to average wage inflation; the curve is virtually vertical for high inflation rates but becomes flatter as inflation declines. Second, macroeconomic volatility shifts the Phillips curve outward, implying that stabilization policies can play an important role in shaping the trade-off. Third, nominal wages tend to be endogenously rigid also upward, at low inflation. Fourth, when inflation decreases, volatility of unemployment increases whereas the volatility of inflation decreases: this implies a long-run trade-off also between the volatility of unemployment and that of wage inflation. Mode of access: Internet Benigno, Pierpaolo. IMF Working Papers; Working Paper ; No. 2009/034 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/034/001.2009.issue-034-en.xml IMF e-Library