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

This paper investigates the importance of labor market institutions for inflation and unemployment dynamics. Using the … and their interaction is crucial for the dynamics of inflation and unemployment. We estimate a panel VAR with … deterministically varying coefficients and find that there is a profound difference in the responses of unemployment and inflation to …

for the unemployment-inflation trade- off and for the conduct of monetary policy. We proceed in two steps. We first leave … firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence of labor … market frictions and real wage rigidities. We show the nature of the tradeoff between inflation and unemployment …

model labor market frictions and unemployment explicitly. This chapter describes some of the essential ingredients and …

inflation and the stabilization of the welfare relevant output gap after a productivity shock hits the economy. When the … standard model is enhanced by real wage rigidities or labor turnover costs, an endogenous short-run inflation-output tradeoff … rigidities. Second, labor turnover costs are the dominant source for the inflation-output tradeoff when both rigidities are …

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 …

consensus is that real wage rigidities can be a useful mechanism to induce the inflation persistence that is absent in the … account, the results change dramatically, both qualitatively and quantitatively. Real wage rigidities imply neither inflation … inflation target of the monetary policy. -- Disinflation ; sticky prices ; real wage rigidities ; nonlinearities …

provides a natural interpretation for the dynamic inflation - unemployment relation found in the data …Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and … inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new …