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Labor turnover costs, workers' heterogeneity, and optimal monetary policy

Faia, Ester; Lechthaler, Wolfgang; Merkl, Christian - 2009

We study the design of optimal monetary policy in a New Keynesian model with labor turnover costs in which wages are set according to a right to manage bargaining where the firms' counterpart is given by currently employed workers. Our model captures well the salient features of European labor...

Persistent link: https://www.econbiz.de/10003879356

Inflation persistence and the Phillips curve revisited

Karanassou, Marika (contributor); … - 2007

A major criticism against staggered nominal contracts is that they give rise to the so called "persistency puzzle" - although they generate price inertia, they cannot account for the stylised fact of inflation persistence. It is thus commonly asserted that, in the context of the new Phillips...

Persistent link: https://www.econbiz.de/10003531676

A theory of price adjustment under loss aversion

Ahrens, Steffen; Pirschel, Inske; Snower, Dennis J. - 2014

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

Persistent link: https://www.econbiz.de/10010350414

On reputation : a microfoundation of contract enforcement and price rigidity

Fehr, Ernst (contributor); Brown, Martin (contributor); … - 2008

We study the impact of reputational incentives in markets characterized by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the...

Persistent link: https://www.econbiz.de/10003750306

Asymmetric labor market institutions in the EMU and the volatility of inflation and unemployment differentials

Abbritti, Mirko; Müller, Andreas - 2012

How does the asymmetry of labor market institutions affect the adjustment of a currency union to shocks? To answer this question, this paper sets up a dynamic currency union model with monopolistic competition and sticky prices, hiring frictions and real wage rigidities. In our analysis, we...

Persistent link: https://www.econbiz.de/10009536516

A reevaluation of the role of family in immigrants' labor market activity : evidence from a comparison of single and married immigrants

Cohen-Goldner, Sarit; Gotlibovski, Chemi; Kahana, Nava - 2009

Previous papers tested the validity of the Family Investment Hypothesis (FIH) among immigrants by comparing the labor market outcomes of immigrant couples and native or mixed couples. Here we propose an alternative test for the FIH which is based on a comparison between married and single...

Persistent link: https://www.econbiz.de/10003847131

The role of marriage in immigrants' human capital investment under liquidity constraints

Cohen-Goldner, Sarit (contributor); … - 2006

This paper presents a two-period human capital investment model of married and single immigrants under binding liquidity constraints, which explains alternative patterns in the host country's labor market. These patterns are also compared to those of natives who face a perfect capital market. By...

Persistent link: https://www.econbiz.de/10003469464

Optimal price indices for targeting inflation under incomplete markets

Anand, Rahul; Prasad, Eswar S. - 2010

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. In this paper, we develop a twosector two-good closed economy new Keynesian model to study the optimal choice of price index in markets with...

Persistent link: https://www.econbiz.de/10008810538

Financial constraints and innovation : why poor countries don’t catch up

Gorodnichenko, Yuriy; Schnitzer, Monika - 2010

This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey...

Persistent link: https://www.econbiz.de/10003941706

Monitoring costs, credit constraints and entrepreneurship

Banerji, Sanjay; Raj, Rajesh S. N.; Sen, Kunal - 2012

The vast majority of firms in developing economies are micro and small enterprises owned by families whose members also provide the labour to the units. Often, they fail to grow in size even with the relaxation of credit constraints. In this paper, we show that frictions in the labour market...

Persistent link: https://www.econbiz.de/10009548201

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