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LABOR MARKET RESPONSE TO UNANTICIPATED INFLATION

By A. Steven Holland

Abstract

inflation rates have risen around the woiid over the last 20 years the impact of inflation has become a topic of widespread interest, Evidence suggests that higher inflation imposes real costs on society by leading to increased uncertainty about futur-e inflation and, as a result, a misallocation of resources, ’ This article examines the impact of inflation uncertainty on the allocation of labor resources and shows that the economy produces less output with a given quanti ~ of productive resources when inflation uncertainty is higher.

Topics: Nominal Wage Rigidity
Year: 2011
OAI identifier: oai:CiteSeerX.psu:10.1.1.196.5777
Provided by: CiteSeerX
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