Document Type

Working Paper

Abstract

This study derives a reduced-form equation for the aggregate supply curve from a model in which firms pay efficiency wages and workers have imperfect information about average wages at other firms. If specific assumptions are made about workers’ expectations of average wages and about aggregate demand, the model predicts how the aggregate demand and supply curves shift and how output and prices adjust in response to demand shocks and supply shocks. The model also provides an alternative explanation for Lucas’ (1973) finding that the AS curve is steeper in countries with greater inflation variability.

Publication Date

5-1-2009

Original Citation

Campbell, Carl M., "An Efficiency Wage - Imperfect Information Model of the Aggregate Supply Curve," MPRA Paper No. 15296, posted 18 May 2009.

Legacy Department

Department of Economics

Language

eng

Publisher

Munich Personal RePEc Archive

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