This paper reviews recent approaches to modeling the labour market and assesses their implications for inflation dynamics through both their effect on marginal cost and on price-setting behaviour. In a search and matching environment, we consider the following modeling setups: right-to-manage...

This paper reviews recent approaches to modeling the labour market and assessestheir implications for in‡ation dynamics through both their e¤ect on marginalcost and on price-setting behaviour. In a search and matching environment, weconsider the following modeling setups: right-to-manage...

We use a cohort based model to analyse determinants of labour force participation fordisaggregated groups of workers in the euro area and the five largest euro areacountries. The model captures age and cohort effects as indicators of (unobserved)determinants of participation behaviour. We use...

This paper examines the impact of downward wage rigidity (nominal and real) onoptimal steady-state inflation. For this purpose, we extend the workhorse model ofErceg, Henderson and Levin (2000) by introducing asymmetric menu costs for wagesetting. We estimate the key parameters by simulated...

Labour Supply and Incentives to Work in Europe highlights recent developments in the labour supply in Europe and gives a detailed assessment of their link with economic policies and labour market institutions. Despite major changes in European labour supply during the past few decades, the...

This paper investigates the importance of labor market institutions for inflation and unemployment dynamics. Using the New Keynesian framework we argue that labor market institutions should be divided into those institutions that cause Unemployment Rigidities (UR) and those that cause Real Wage...

This paper presents stylised facts about the business cycle of the euro area. The results suggest that the stylised facts for the euro area economy and the US are very similar. The magnitude of the fluctuations in consumption, investment, prices, inflation, interest rate, monetary aggregates...

The VIX, the stock market option-based implied volatility, strongly co-moves with measures of the monetary policy stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility (“uncertainty”), we find that a lax monetary policy decreases...

This paper conducts the first empirical study of the bank balance sheet channel using data on discouraged and informally rejected firms in addition to information on the formal loan granting process. I take advantage of a unique survey data on the credit experience of firms in 8 economies that...

To identify credit availability we analyze the extensive and intensive margins of lending with loan applications and all loans granted in Spain. We find that during the period analyzed both worse economic and tighter monetary conditions reduce loan granting, especially to firms or from banks...