Indivisible labor is not the only type of nonconvexity affecting labor supply decisions. Another type of nonconvexity arises in economies with sectors whenever individuals can work in only one sector at a time. I introduce this restriction into an open economy model with a tradeable and a...

We propose a novel methodological approach to disentangle the main structural shocks affecting the US labour share of income during the immediate post-war era (1948Q1- 1984Q4) and the Great Moderation (1985Q1-2018Q3). We motivate a SVAR model in aggregate demand, unemployment rate, real wage and...

This paper analyses the implications of real wage rigidities in a stochastic two-country general equilibrium model. It is shown how real wage rigidities in one country affect welfare in both countries. Assuming that the choice of whether or not to adopt flexible wages is in the hands of labour...