The paper analyzes the effects of disembodied technological progress on steady state hours worked in the workhorse New-Keynesian model, which features a neoclassical labor market, and its extension that allows for equilibrium unemployment. Both versions of the model are shown to imply a positive...

We analyze the implications of changes in the trend growth rate for optimal monetary policy in the presence of search and matching unemployment. We show that trend growth in itself does not generate a trade-off for the monetary authority, but that it interacts importantly with the inefficiencies...