It is believed and observed that lack of modern understanding of the economic market of developing countries and it theoretical functioning, is understood to be a contributing factor in affecting quality development and dispensing of monetary policy, resulting in its inability to address desired...

In this paper, I analyze optimal monetary policy in developing countries whose labor markets are characterized by the presence of a large informal sector. I develop a closed economy model with nominal price and wage rigidities, search and matching frictions, and a dual labor market: a formal one...