Labor market indicators such as unemployment rates and labor force participation show a significant amount of heterogeneity across demographic groups, which is often not incorporated in monetary policy analysis. In this paper, I build a dynamic stochastic general equilibrium model with skill...

The paper explores the redistributive effects of a monetary policy in a limited participation framework and skill heterogeneity among labor. The main finding is that an expansionary monetary policy redistributes consumption between financial market participants and non participants, as well as...

This paper analyses how labour market heterogeneity affects unemployment, productivity and business cycle dynamics that are relevant for monetary policy. The model matches remarkably well the short and long run dynamics of skilled and unskilled workers. Skill mismatch and skill-specific labour...

We study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a dynamic equilibrium model with capital-skill complementarity. Such a tax reform leads to expansionary long-run aggregate effects, but is coupled with an increase in the skill premium....

We present a model in which temporary shocks can permanently scar the economy's productive capacity. Unemployed workers lose skill and are expensive to retrain, generating multiple steady state unemployment rates. Large temporary shocks push the economy into a liquidity trap, generating...