, inflation and unemployment, we detect a wrong sign in the response of inflation to contractionary monetary policy shocks … significant unemployment inflation trade-off emerges. These conclusions are confirmed by using industrial production instead of … the unemployment rate in the VAR model. …

contain unemployment as firms hoarded labor during the downturn. Most striking, wage bills in euro area crisis countries and … lead to unemployment surges, as firms are forced to cut costs when financing becomes expensive or is no longer available …. As a result, all countries with risk premium shocks saw unemployment surge, even as euro area core countries managed to …