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working schedules. This simple model can generate unemployment, even if wages adjust instantaneously, firms are perfectly … working for the same hours as high-skilled workers at competitive wages based on productivity. Thus our model offers an …
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"A major criticism of standard specifications of price adjustment in models for monetary policy analysis is that they violate the natural rate hypothesis by allowing output to differ from potential in steady state. In this paper we estimate a dynamic optimizing business cycle model whose...
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