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Labour market skills, endogenous productivity and business cycles

Abbritti, Mirko; Consolo, Agostino - 2022

This paper analyses how labour market heterogeneity affects unemployment, productivity and business cycle dynamics that are relevant for monetary policy. The model matches remarkably well the short and long run dynamics of skilled and unskilled workers. Skill mismatch and skill-specific labour...

Persistent link: https://www.econbiz.de/10012880717

Endogenous growth, downward wage rigidity and optimal inflation

Abbritti, Mirko; Consolo, Agostino; Weber, Sebastian - 2021

Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses …-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change … the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of …

Persistent link: https://www.econbiz.de/10012745355

Lower for longer under endogenous technology growth

Schmöller, Michaela; Spitzer, Martin - 2022

strengthens the gains from make-up strategies relative to inflation targeting, especially if policy space is reduced. This result … permanent scars on long-run aggregate supply. Make-up strategies not only foster the alignment of inflation with target but also … inherent make-up element is sufficiently pronounced. Inflation is less responsive to monetary policy due to the interaction …

Persistent link: https://www.econbiz.de/10013342235

Switching-track after the Great Recession

Vinci, Francesca; Licandro, Omar - 2021

We propose a theoretical framework to reconcile episodes of V-shaped and L-shaped recovery, en- compassing the behaviour of the U.S. economy before and after the Great Recession. In a DSGE model with endogenous growth, negative demand shocks destroy productive capacity, moving GDP to a lower...

Persistent link: https://www.econbiz.de/10012627907

International medium-term business cycles

Hirschbühl, Dominik; Spitzer, Martin - 2021

Foreign driven medium-term oscillations that originate from uctuations in technological frontier countries gained widespread attention among policymakers. To study this phenomenon in the context of domestic and other foreign drivers of the euro area business cycle, we develop a medium-scale,...

Persistent link: https://www.econbiz.de/10012499631

The risk premium channel and long-term growth

Schumacher, Malte Daniel; Żochowski, Dawid - 2017

We study a quantitative DSGE model linking a state of the art asset pricing framework à la Kung and Schmid (2015) with a constraint on leverage as in Gertler and Kiyotaki (2010). We show that a mere increase in the probability of firms being financially constrained leads to an increase in risk...