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Monetary persistence and the labor market : a new perspective

Lechthaler, Wolfgang (contributor); … - 2008

that the employment rate is slow to converge to its steady state value after a monetary shock. Under reasonable … calibrations, the after-effects of a shock continue to exert an effect on the labor market even long after the shock is over. The … sluggishness of the labor market translates to the product market and thus the output effects of the monetary shock become more …

Persistent link: https://www.econbiz.de/10003665644

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/10010341721

Monetary persistence, imperfect competition, and staggering complementarities

Merkl, Christian (contributor); … - 2005

This paper explores the influence of wage and price staggering on monetary persistence. First, our analysis indicates that the degree of monetary persistence generated by wage vis-à-vis price staggering depends on the relative competitiveness of the labor and product markets. We show that the...

Persistent link: https://www.econbiz.de/10003066334

A theory of wage adjustment under loss aversion

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

We present a new theory of wage adjustment, based on worker loss aversion. In line with prospect theory, the workers … wage. Firms adjust wages flexibly in response to variations in labor demand. The resulting theory of wage adjustment is …

Persistent link: https://www.econbiz.de/10010440552

Quadratic labor adjustment costs and the New-Keynesian model

Lechthaler, Wolfgang (contributor); … - 2008

We build quadratic labor adjustment costs into an otherwise standard New-Keynesian model of the business cycle and show that this is sufficient to increase both, output and inflation persistence. -- Monetary persistence ; labor adjustment costs

Persistent link: https://www.econbiz.de/10003757577

Increasing returns to scale and the long-run Phillips curve

Vaona, Andrea (contributor); Snower, Dennis J. (contributor) - 2006

A growing body of empirical evidence shows that there exists a long-run positive tradeoff between inflation and real macroeconomic activity. Within a New Keynesian framewok, we examine how increasing returns generate a positive long-run relation between inflation and output.

Persistent link: https://www.econbiz.de/10003320766

Unemployment accounts and employment incentives

Brown, Alessio J. G. (contributor); … - 2006

We explore the far-reaching implications of replacing current unemployment benefit (UB) systems by an unemployment accounts (UA) system. Under the UA system, employed people are required to make ongoing contributions to their UAs and the balances in these accounts are available to them during...

Persistent link: https://www.econbiz.de/10003313858

Hyperbolic discounting and the Phillips curve

Graham, Liam (contributor); Snower, Dennis J. (contributor) - 2007

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.

Persistent link: https://www.econbiz.de/10003485601

Inflation persistence and the Philips 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/10003485604

Minimum wages and firm training

Lechthaler, Wolfgang (contributor); … - 2006

The paper analyzes the influence of minimum wages on firms' incentive to train their employees. We show that this influence rests on two countervailing effects: minimum wages (i) augment wage compression and thereby raise firms' incentives to train and (ii) reduce the profitability of employees,...

Persistent link: https://www.econbiz.de/10003373639