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We develop a theory of labor markets in a monetary economy with four realistic features: search frictions, worker productivity shocks, wage rigidity, and two-sided lack of commitment. Due to the non-Coasean nature of labor contracts, inefficient job separations occur in the form of endogenous...
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Unemployment in the United Kingdom has fallen from high European-style levels to US levels. I argue that the key … monetary policy as an institutional change that reduced inflationary pressures in the face of falling unemployment. The decline …
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