inflation and the stabilization of the welfare relevant output gap after a productivity shock hits the economy. When the … standard model is enhanced by real wage rigidities or labor turnover costs, an endogenous short-run inflation-output tradeoff … rigidities. Second, labor turnover costs are the dominant source for the inflation-output tradeoff when both rigidities are …

-side effects into account, we get more persistent inflation and output reactions.We also show that the dichotomy does not hold for … discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias.We also show that commitment to an … optimal monetary policy not only corrects the inflation bias but also increases the persistence of output reactions …

. Positively, we find that inflation and unemployment differentials strongly depend on the underlying labor market structures …How do asymmetric labor market institutions affect the volatility of innovation and unemployment differentials in a … union model with unemployment, hiring frictions and real wage rigidities. The model provides a rigorous but tractable …

explaining the deviations of household inflation and unemployment expectations from the rational expectations benchmark … demographic groups have sharply different predictions for macroeconomic aggregates like the inflation rate …

. It is shown that a credibly fixed exchange rate to a low inflation country, like a currency board, can reduce corruption …

hyperbolic discounting leads to inflation having significant long-run effects on real variables. …