Can loss aversion shed light on the deflation puzzle?

IF 1.8 3区经济学 Q2 ECONOMICS

Review of Keynesian Economics Pub Date : 2021-01-19 DOI:10.4337/roke.2021.01.02

Jenny N. Lye,Ian M. McDonald

引用次数: 0

Abstract

This paper argues that the application of loss aversion to wage determination can explain the deflation puzzle: the failure of persistently high unemployment to exert a persistent downward impact on the rate of inflation in money wages. This is an improvement on other theories of the deflation puzzle which simply assume downward wage rigidity, namely the hysteresis theory, the lubrication theory and the efficiency wage theory. The paper presents estimates that support the loss-aversion explanation of the deflation puzzle for both the US and Australia. Furthermore, our estimation approach gives a more precise estimate of the potential rate of unemployment than does the natural rate approach and reveals potential rates of unemployment for the US and Australia at the end of 2017 of about 4 per cent and 3.3 per cent respectively.

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损失厌恶情绪能解释通缩之谜吗?

本文认为，将损失厌恶应用于工资决定可以解释通货紧缩之谜:持续的高失业率未能对货币工资的通货膨胀率产生持续的下降影响。这是对其他简单假设工资刚性向下的通货紧缩理论的改进，即滞后理论、润滑理论和效率工资理论。本文给出了支持美国和澳大利亚通缩之谜的损失厌恶解释的估计。此外，我们的估计方法对潜在失业率的估计比自然失业率方法更精确，并显示美国和澳大利亚在2017年底的潜在失业率分别约为4%和3.3%。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Review of Keynesian Economics ECONOMICS-

CiteScore

3.10

自引率

12.50%

发文量

期刊介绍： The Review of Keynesian Economics (ROKE) is dedicated to the promotion of research in Keynesian economics. Not only does that include Keynesian ideas about macroeconomic theory and policy, it also extends to microeconomic and meso-economic analysis and relevant empirical and historical research. The journal provides a forum for developing and disseminating Keynesian ideas, and intends to encourage critical exchange with other macroeconomic paradigms. The journal is dedicated to the development of Keynesian theory and policy. In our view, Keynesian theory should hold a similar place in economics to that held by the theory of evolution in biology. Many individual economists still work within the Keynesian paradigm, but intellectual success demands institutional support that can leverage those individual efforts. The journal offers such support by providing a forum for developing and sharing Keynesian ideas. Not only does that include ideas about macroeconomic theory and policy, it also extends to microeconomic and meso-economic analysis and relevant empirical and historical research. We see a bright future for the Keynesian approach to macroeconomics and invite the economics profession to join us by subscribing to the journal and submitting manuscripts.