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.lt;brgt;lt;brgt;We proceed in two steps. We … effect on unemployment in the constrained efficient allocation. We then focus on the implications of alternative real wage …

European unemployment is widely regarded as a problem of excessive real wages. This view as it is usually expressed …