2021•Book Publisher International (a part of SCIENCEDOMAIN International)Requires access
Determination of Revisiting Staggered Wages to Consider Discounting
Patricia Bonini, Sérgio Da Silva
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Abstract
The discount factor in the workers' loss function is ignored in the literature on staggered wages. Discounting, on the other hand, should be regarded as an additional microfoundation with implications for discretionary monetary policy. This study highlights that discounting in the model of staggered wages actually lowers the time-consistent steady inflation. We reexamine the topic and show that under the scenario of staggered wages, discounting reduces time-consistent steady inflation.