A coincidence in time between the volatility break associated with the "Great Moderation" and large changes in the pattern of conditional and unconditional correlations between output, hours and labor productivity was detected by Galí and Gambetti (2009). We provide a novel explanation for...

The fall in US labor force participation during the Great Recession stands in sharp contrast with its parallel increase in the euro area. In addition to structural forces, cyclical factors are shown to account for this phenomenon, with the participation rate being procyclical in the US from the...

A coincidence in time between the volatility break associated with the quot;Great Moderationquot; and large changes in the pattern of conditional and unconditional correlations among output, hours and labor productivity has been detected by Gali and Gambetti (2009). We provide a novel...

A shift in the correlation structure of U.S. macroeconomic series has been documented by Galí and Gambetti (2009) with corresponding changes in the dynamic responses to shocks. We provide an explanation of these findings based on the observed change in the structure of labor compensation and,...

A shift in the design of labor compensation occurred at around the mid-1980s in the U.S. and deals with an increased role of performance pay in driving the cyclical movements of wages. Using a DSGE model we show that this structural change accounts at least qualitatively for many observed...

A coincidence in time between the volatility break associated with the "Great Moderation" and large changes in the pattern of conditional and unconditional correlations between output, hours and labor productivity was detected by Gal� and Gambetti (2009). We provide a novel explanation for...