It has been noted that the search and matching model cannot account for the observed unemployment fluctuations. Gertler …

, causing both unemployment and excessive value added in exports. Moreover, excessive wages induce too much outsourcing of …

"We construct a utility-based model of fluctuations, with nominal rigidities and unemployment, and draw its … implications for the unemployment-inflation tradeoff and for the conduct of monetary policy.We proceed in two steps. We first leave … unemployment in the constrained efficient allocation. We then focus on the implications of alternative real wage setting mechanisms …

upward, at low inflation. Second, a closed-form solution for a long run Phillips curve relates average unemployment to … important role in shaping the trade-off. Fourth, when inflation decreases, volatility of unemployment increases whereas the … volatility of inflation decreases: this implies a long-run trade-off also between the volatility of unemployment and that of wage …