This paper offers a reappraisal of the inflation-unemployment tradeoff, based on ?frictional growth,? describing the interplay between nominal frictions and money growth. When the money supply grows in the presence of price inertia (due to staggered wage contracts with time discounting), the...

In this paper we develop a simple model of the labour market in the neoclassical framework. According to the mainstream literature, dating back to, e.g., Friedman (1968) and Phelps (1968), only temporary deviations from the natural rate of employment may take place in the "expectations...

Output gap revisions can be large even after many years. Real-time reliability tests might therefore be sensitive to the choice of the final output gap vintage that the real-time estimates are compared to. This is the case for the Federal Reserve's output gap. When accounting for revisions in...