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Employment, hours and optimal monetary policy

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  • Dossche, Maarten
  • Lewis, Vivien
  • Poilly, Céline

Abstract

We characterize optimal monetary policy in a New Keynesian search-and-matching model where multiple-worker firms satisfy demand in the short run by adjusting hours per worker. Imperfect product market competition and search frictions reduce steady state hours per worker below the efficient level. Bargaining results in a convex JEL Classification: E30, E50, E60

Suggested Citation

  • Dossche, Maarten & Lewis, Vivien & Poilly, Céline, 2014. "Employment, hours and optimal monetary policy," Working Paper Series 1713, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20141713
    Note: 3577821
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    References listed on IDEAS

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    Cited by:

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    2. Pierrick Clerc, 2021. "The Dynamics of Unemployment and Inflation in New Keynesian Models with Two Labor Margins," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(2-3), pages 301-332, March.

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    More about this item

    Keywords

    employment; hours; optimal monetary policy; wage curve;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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