When the economy is in a liquidity trap and households have a precautionary motive to save against unemployment risk … unemployment risk and decline in demand. As a result, market incompleteness may alleviate contractions in output and inflation …

important source of uncertainty is the relationship between inflation and unemployment. This paper studies the optimal monetary … policy in the presence of uncertainty about the natural unemployment rate, the short-run inflation-unemployment tradeoff and …

When the economy is in a liquidity trap and households have a precautionary motive to save against unemployment risk … unemployment risk and decline in demand. As a result, market incompleteness may alleviate contractions in output and inflation …

important source of uncertainty is the relationship between inflation and unemployment. This paper studies the optimal monetary … policy in the presence of uncertainty about the natural unemployment rate, the short-run inflation-unemployment tradeoff and …

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 …

This paper analyses how labour market heterogeneity affects unemployment, productivity and business cycle dynamics that … skilled workers increases the natural rate of unemployment and reduces total factor productivity with long- run effects on the … Beveridge curves. Skill-specific labour market heterogeneity leads to a attening of the Phillips curve as wages and unemployment …

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 …

frictions render labor-market risk countercyclical and endogenous to monetary policy. Our main result is that a majority of … households prefer substantial stabilization of unemployment even if this means deviations from price stability. A monetary policy … focused on unemployment stabilization helps "Main Street" by providing consumption insurance. It hurts "Wall Street" by …

We introduce skill decay during unemployment into Blanchard and Gali's (2008) New-Keynesian model with hiring frictions … and real-wage rigidity. Plausible values of quarterly skill decay and realwage rigidity turn the long-run marginal cost-unemployment … relationship positive in a "European" labour market with little hiring but not in a fluid "American" one. If the marginal cost-unemployment …