Using a dynamic efficiency wage model, where a Phillips curve appears because worker morale depends on the unemployment rate and a change in nominal wages, we analyze the effects of fiscal and monetary expansions and of an employment subsidy on unemployment in two steady states. In one steady...

Standard economic wisdom generally stresses the benefits of increased competition on the product market. This paper proposes a model of monopolistic competition with an endogenous determination of workers flows in and out of unemployment, where wages are determined according to an efficiency...