The response of real wages to unanticipated money growth

This paper investigates the response of real wages to unanticipated money growth in the light of equilibrium theories of the business cycle. These theories, in their main different versions, do not deliver a common and unambiguous hypothesis on this issue. While some models implu a countercyclical real wage response during monetary cycles, others yield the opposite result of a procyclical real wage. Econometric analysis of annual and quarterly U.S. data, reported in the paper, indicates that there is a weak negative real wage response to an unanticipated increase in money growth.