Seminar 234

Title: Are Real Wages Procyclical Conditional on a Monetary Policy Shock?

Speaker: Eunseong Ma, Louisiana State University

Time: August 25, 2020 11:00 am-12:30

Venue: online seminar

About the speaker

Eunseong Ma is an Assistant Professor of Economics at Louisiana State University. He received his Ph.D. from Texas A&M University. His research interests include macroeconomics and monetary economics. His work has appeared in the Journal of Money, Credit and Banking and Macroeconomic Dynamics.

Abstract:

It is well-known that real wages are procyclical conditional on a monetary policy shock. This paper challenges this conventional view by using a quantitative heterogeneous-agent New Keynesian economy with sticky wages. In the model with the benchmark calibration, the wage rate per effective unit of labor decreases following a monetary expansion, while the data-consistent measure for real wages—total labor compensation divided by total hours—increases. Therefore, I conclude that true real wages are countercyclical conditional on a monetary policy shock, which implies that the predictions of New Keynesian models with wage rigidities are consistent with the data.