Real wages rise in response to money supply shocks, boosting purchasing power.
The article looks at how changes in demand affect real wages. Two previous studies had conflicting results, so this study tried a different approach. By including more variables and using a specific method, the researchers found that when demand goes up, real wages also increase. This suggests that prices are less flexible than wages when demand changes. Additionally, there is no strong evidence that wages stay the same when demand changes. This new method improves our understanding of how wages respond to changes in demand.