After an expansionary monetary policy shock employment increases and unemployment falls. In standard New Keynesian … models the fall in aggregate unemployment does not affect employed workers at all. However, Lüchinger, Meier and Stutzer … (2010) found that the risk of unemployment negatively affects utility of employed workers: An increases in aggregate …

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 …