Real wage response to monetary shocks: A disaggregated analysis

Abstract

This paper presents a disaggregated analysis and investigates empirically the real wage response during the monetary cycle, using the disaggregated quarterly data for the U.S. manufacturing industry. I find, like Leiderman, a countercyclical real wage response during the monetary cycle. I also find that while both unanticipated and anticipated money changes have significant effects on the real wage in the durable goods sector, anticipated money changes do not affect the real wage in the nondurable goods sector. This sharply contrasts with the neutrality result and provides a new insight to the sectoral behavior of the real wages.