I reconcile macro- and micro-evidence on price-setting in a search and matching framework. Negotiation of wages substantially increases strategic complementarity of price-setting and thus real price rigidities which reduces implied price durations. This mechanism also dampens wage responses to...

The short-run non-neutrality of money and its implications for inflation dynamics are examined in a monetary search economy with heterogeneous agents. Lump-sum money injections affect the distribution of money holdings in equilibrium and thus generate short-run non-neutrality. The response of...

We focus on a quantitative assessment of rigid labor markets in an environment of stable monetary policy. We ask how wages and labor market shocks feed into the inflation process and derive monetary policy implications. We structurally model matching frictions and rigid wages in line with an...