Bank of Israel paper advocates inflation sacrifice when wages are rigid


When facing wage rigidity, monetary policy should accommodate larger fluctuations in inflation to keep unemployment more steady, according to a discussion paper published by the Bank of Israel on January 13.

The author, Alon Binyamini, considers how different labour market conditions impact the sacrifice ratio – the cost of the economic output that must be foregone to move the inflation rate.

Nominal wage rigidity, the author finds, lowers unemployment as wages fall and labour effort increases

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: