rate and the unemployment rate? In the model, fluctuations are prominently driven by productivity shocks which are commonly … replicates the conditional volatility of job finding and unemployment, so that the Shimer critique does not apply. Instead the … shocks lead to a fall in job finding and an increase in unemployment thereby opposing the dynamics in the standard model …

, unemployment rate) and the assumption of a zero discount rate. We show that when the discount rate is positive in a general …-price staggering models can generate both substantial inflation persistence and a nonzero inflation-unemployment tradeoff in the long …