Labor Market Frictions into Staggered Wage Contracts
AbstractThis paper proposes a generalization of the Calvo wage-setting equation, which embeds labor market frictions in the form of a Nash wage bargain. Adding labor market frictions changes significantly the dynamics of the standard wage-setting equation, such that it may have non-trivial implications for the design of optimal monetary policy, and could improve the ability of a general equilibrium model to replicate important labor market stylized facts.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 5 (2006)
Issue (Month): 13 ()
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Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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