Shirking in a monetary business cycle model
AbstractThis paper investigates whether a limited participation model with imperfectly observed effort can reproduce the economy's responses to a monetary policy shock without appealing to high labour supply elasticities or high markups. The results demonstrate that the presence of imperfectly observed effort, in combination with the limited participation assumption, allows the model to account for the presence of involuntary unemployment, nominal wage rigidity, and the observed responses to monetary policy shocks.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 39 (2006)
Issue (Month): 3 (August)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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- Brecher, Richard A. & Chen, Zhiqi & Choudhri, Ehsan U., 2010. "A dynamic model of shirking and unemployment: Private saving, public debt, and optimal taxation," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 34(8), pages 1392-1402, August.
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- Andrea Vaona, 2014. "The Price-Price Phillips Curve in Small Open Economies and Monetary Unions: Theory and Empirics," Kiel Working Papers 1904, Kiel Institute for the World Economy.
- Campbell III, Carl M., 2006. "A model of the determinants of effort," Economic Modelling, Elsevier, Elsevier, vol. 23(2), pages 215-237, March.
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