This paper develops a simple framework for examining human capital accumulation, unemployment, and relative wages in a …

utility calculations. There is a stabilization problem because there are one-period nominal contracts for wages, or prices, or …

-optimal equilibrium that would occur under completely flexible wages and prices; that is, the model exhibits a tradeoff between … stabilizing the output gap, price inflation, and wage inflation. The Pareto optimum is attainable only if either wages or prices …