Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Well, real wages wouldn’t be different, but the adjustment could come either through flexible nominal wages or faster increases in prices. In the FRB/US model, which is used to generate these simulations, trend unit labor costs do cause an increase in the rate of price inflation, which is what you see here, and that helps equilibrate the labor market.

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