Excessive levels of firing costs have been consistently blamed for the relatively weak employment in Europe, yet the concusions to be drawn from the literature are somewhat ambiguous. The paper re-examines the impact of adjustment costs under uncertainty.

We study simple fiscal rules for stabilizing the government debt level in response to asymmetric demand shocks in a country that belongs to a currency union. We compare debt stabilization through tax rate adjustments with debt stabilization through expenditure changes. While rapid and flexible...

This paper considers a dynamic matching model with imperfectly observable worker effort. In equilibrium, the wage distribution is truncated from below by a no-shirking condition. This downward wage rigidity induces the same type of inefficient churning and "contractual fragility" as in Ramey and...

Taking into account two salient Spanish stylized facts, namely, a persistent disinflationary process and hysteresis in the unemployment, this paper tries to answer the following question: Is a nominal permanent disinflation compatible with short-run unemployment costs but also with long-run...

The co-movements of labor productivity with output, total hours, vacancies and unemployment have changed since the mid 1980s. This paper offers an explanation for the sharp break in the fl uctuations of labor market variables based on endogenous labor supply decisions following the mortgage...

In a search and matching environment, this paper assesses a range of modeling setups against macro evidence for the monetary transmission mechanism in the euro area. In particular, we assess right-to-manage vs. efficient bargaining, flexible vs. sticky wages, interactions at the firm level...

We analyze the effects of neutral and investment-specific technology shocks on hours worked and unemployment. We characterize the response of unemployment in terms of job separation and job finding rates. We find that job separation rates mainly account for the impact response of unemployment...

We decompose the low-frequency movements in labour productivity into an investment-neutral and investment-specific technology component. We show that neutral technology shocks cause a short run increase in job creation and job destruction and leads to a reduction in aggregate employment....

We analyze the evolution of General Government employment in Spain over the economic crisis and the recent fiscal consolidation process. We characterize the changes in the structure and composition of General government workforce between economics sectors, level of administration, and type of...