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Incorporating Labour Market Frictions into an Optimising-Based Monetary Policy Model Author info | Abstract | Publisher info | Download info | Related research | Statistics Moyen, S.
Sahuc, J-G.
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This paper examines the effects of introducing a non Walrasian labour market into the "New Neoclassical Synthesis'' framework. A dynamic stochastic general equilibrium model is formulated, solved, and calibrated in order to evaluate its ability to replicate the main features of the Euro area economy. This framework allows us to study the effects of labour market rigidities, nominal rigidities, and other frictions to give account of the impact of monetary policy, technology, public spending, and preference shocks. Our simulations show that: (i) real rigidities complement but do not supplant nominal rigidities, (ii) the Beveridge and Phillips relations are reproduced, (iii) hours worked are too sensitive an adjustment variable, and (iv) the real wage dynamics is still procyclical.
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Paper provided by Banque de France in its series Documents de Travail with number
105.
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Length: 42 pages
Date of creation: 2004Date of revision:
Handle: RePEc:bfr:banfra:105Contact details of provider: Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS Web page: http://www.banque-france.fr/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Thierry Demoulin).
Keywords: DSGE models ; Nominal rigidities ; Real rigidities ; Labour market ; Endogenous persistence ; Euro area ; Other versions of this item:
Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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