Labor Market Participation, Unemployment and Monetary Policy

We incorporate a participation decision in a standard New Keynesian model with matching frictions and show that treating the labor force as constant leads to incorrect evaluation of alternative policies. We also show that the presence of a participation margin mitigates the Shimer critique.

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Year of publication:	2014
Authors:	Campolmi, Alessia ; Gnocchi, Stefano
Institutions:	Bank of Canada
Subject:	Business fluctuations and cycles \| Labour markets \| Transmission of monetary policy

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Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	59 pages
Classification:	E24 - Employment; Unemployment; Wages ; E32 - Business Fluctuations; Cycles ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010762042