In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business … employment and hours affecting inflation dynamics via marginal costs. We find that the response of unemployment and inflation to … persistent movements of aggregate inflation. Moreover, the impact of a monetary policy shock on unemployment and inflation …

In this paper we incorporate a labor market with matching frictions and wage …

historical negative correlation between the unemployment rate and the employer-to-employer (EE) transition rate up to the Great … rate increased commensurately with the decline in unemployment. We then decompose the channels through which a change in EE …

unemployment dynamics. The optimal monetary policy prescribes a strong positive response to EE fluctuations, implying that central … banks should distinguish between recovery episodes with similar unemployment but different EE dynamics. …

build a New Keynesian model with incomplete asset markets, asymmetric search and matching (SAM) frictions across skilled and … shock leads to larger wage increases for high-skilled workers than for low-skilled workers, due to the smaller matching …

correlated with inflation. While existing studies of monetary policy and unemployment only consider consumer money, we build a … greatly amplifies the effect of monetary policy on unemployment, and that an increase in inflation reduces the firm money …

. Unemployed workers' skill losses generate multiple steady-state unemployment rates. When monetary policy is constrained by the … permanent unemployment trap. Since monetary policy is powerless to escape such traps ex post, it must avoid them ex ante. The …

lose skill and are expensive to retrain, generating multiple steady state unemployment rates. Large temporary shocks push …, reducing hiring and catapulting the economy toward the high-unemployment steady state. Even after a short-lived liquidity trap …, the economy recovers slowly at best; at worst, it falls into a permanent unemployment trap. Because monetary policy may be …

We study the properties of optimal monetary policy in an environment of nominal wage rigidity and unemployment. We show … smaller fluctuations of unemployment at the expense of larger inflation fluctuations …

This paper develops a general equilibrium monetary model with performance incentives to study the inflation-unemployment …