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Labor markets and monetary policy : a new-Keynesian model with unemployment

Blanchard, Olivier; Galí, Jordi - 2008

"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 nominal rigidities aside. We show that, under a standard...