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In Blanchard's Macroeconomics textbook, Aggregate Supply relation is derived from wage setting and price setting equations as such: $P = (1+m) W = (1+m)P^e F(u,z)$, which implies that an increase in output (or equivalently a reduction in unemployment rate) leads to higher wage (W) as the bargaining power of the workers increase, and this leads to higher prices through price setting equation. As a result, we have upward sloping AS curve showing positive relation between prices and output. In other textbooks, they explain upward sloping AS curve with sticky wage or sticky price theories. I would like to understand if the first method (WS-PS equations) have any link to sticky wage or sticky price theories. What is confusing is that in the above WS-PS setting, both Wage and Price increase when unemployment rate is low, and this still explains upward sloping AS relation. Maybe, assumptions underlying these 2 different methods are the reasons for different formulations. Then, which method would be more useful to explain why AS curve is upward sloping?

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