a rationale for the practice of inflation zone targeting. We show that the presence of either zone-quadratic preferences … or a zone-linear relationship between inflation and economic activity provides strong incentives to deviate from … structure and relative preference towards economic stability in determining the width of the implied targeted inflation zone. …

non-atomistic unions. It is shown that concentrated labor markets call for more aggressive inflation stabilization. This …

inflation and the extent of real wage rigidity but that these effects depend on the definition of reference norms (e.g. how …

This paper reviews recent approaches to modeling the labour market and assesses their implications for inflation … volatile inflation. Models with wage stickiness and right-to-manage bargaining or with firm-specific labour emerge as the most …

linked to the monetary policy regime. Before and after the "Great Inflation", nominal wages moved in the same direction as … the (required) adjustment of real wages, and in the opposite direction of the price response. During the "Great Inflation … increasing inflation volatility. Using a standard DSGE model, we show that these stylized facts, in particular the estimated …

The link between US labor cost and price inflation has weakened notably over the past three decades. In this paper we … economy of late: (i) improved anchoring of inflation expectations; (ii) the changing constellation of shocks hitting the … economy; (iii) increased trade integration and (iv) rising firm market power. We find that the improved anchoring of inflation …

This paper documents, for the first time in a systematic manner, the link between labor cost and price inflation in the … and price inflation in the four major economies of the euro area and across the three main sectors. The dynamic …. Our results show that it is more likely that labor costs are passed on to price inflation with demand shocks than with …

This paper explores the role that inflation forecasts play in the uncertainty surrounding the estimated effects of … alternative monetary rules on unemployment dynamics in the euro area and the US. We use the inflation forecasts of 8 competing … relative to the different inflation models under two rules. The results suggest that model uncertainty can be a serious issue …