In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The...

Reputation indexes of employment protection have proven popular constructs in studies of the covariation of labor market institutions and macroeconomic outcomes. Portugal occupies an unenviable rank order in such measures of the stringency of employment protection. We critique this reputation in...

This paper analyzes the dynamic effects of different macroeconomic shocks on unemployment in Germany. In a first step, a cointegration analysis of productivity, prices, real wages, employment, and the unemployment rate reveals two long run relationships, interpreted as a labor demand and a wage...