Missing wage inflation? Estimating the natural rate of unemployment in a nonlinear DSGE model

During the recovery from global financial crisis, most advanced economies have experienced a surprisingly weak response of wage inflation to decline in unemployment. In this study, we investigate whether downward rigidity (DWR) is source flattening Phillips curve and lack four economies: Japan, euro area, UK US. We estimate nonlinear New Keynesian model with asymmetric adjustment costs natural rate Wage are found be highly area UK, but not The L-shaped curves between unemployment gap clearly emerge these three economies. Our policy simulations present possibility that missing permanent phenomenon likely reappear further improvement labor market. analysis shows usefulness incorporating DWR into models for understanding background obtaining monetary implications.