The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest …. Recent work by Khan et al (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new … Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In …

(EMU) led to lower wage growth and lower unemployment in participating countries. Following Grüner’s model, monetary … national business cycles which, in turn, leads to higher unemployment risk. In order to counter-balance this effect, trade … unions lower their claims for wage mark-ups resulting in lower wage growth and lower unemployment. This paper uses …

The concept of the "employment threshold" plays an important role in the public discussion of unemployment. The …

indexation to past inflation to vary according to the monetary policy regime. We find that the extent of wage indexation is … significantly lower in an inflation targeting regime, in contrast to monetary targeting, exchange rate targeting and policy regimes …

The Phillips curve has flattened in Spain over 1995-2006: unemployment has fallen by 15 percentage points, with roughly … constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in …’ labor supply or bargaining power differ. Estimation of the curve for Spain indicates that the fall in unemployment since …

It is an open question whether and how indexed wage contracts reduce welfare or raise average inflation. This paper … analyzes the impact of indexed wage contracts on inflation and social welfare in a Barro–Gordon model with discretionary … monetary policy by endogenizing social costs of indexation. Main results are: Wage indexation reduces the inflation bias but …

, we follow Roberts (1997) and Adam and Padula (2003) and use direct measures of inflation expectations. The data source is … the Ifo World Economic Survey, which quarterly polls economic experts about their expected future development of inflation … turns out to more relevant for most countries in our sample. (ii) The use of survey data for inflation expectations yields a …

There is an increasing endorsement for the yen’s depreciation as a means to fight the ongoing deflation in Japan. The … idea of generating inflation via depreciation relies on the assumption that exporters pass-through most of the effect of … deflationary period. We then assess quantitatively the expected effectiveness of depreciation in taming the deflation. Our …

economy. While about half of all studies for the United States find a significant effect of unemployment and inflation on … choice of the sample period is of crucial importance. While in the very long run we find unemployment, inflation and the …

Up to now there was a general conviction that increasing unemployment and inflation have a negative impact on the … the Schröder government. While the results for the former show the known pattern, neither unemployment nor inflation is … significant in the equations of the Schröder government, the latter has even the wrong sign. The missing impact of unemployment …