A new approach for introducing unemployment into the New Keynesian framework. …cover -- Contents -- Series Foreword -- Preface -- Introduction -- A Simple Model of Unemployment and Inflation … Dynamics -- Unemployment, the Output Gap, and the Welfare Costs of Economic Fluctuations -- Unemployment and Monetary Policy …

We develop a utility based model of fluctuations, with nominal rigidities, and unemployment. In doing so, we combine …-Mortensen-Pissarides model, with its focus on labor market frictions and unemployment. In developing this model, we proceed in two steps. We … effect on unemployment in the constrained efficient allocation. We then focus on the implications of alternative real wage …