Interacting nominal and real labour market rigidities

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Interacting nominal and real labour market rigidities

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Vogel, Lukas

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Lukas Vogel

Abstract

Abstract: This note investigates the interaction between nominal and real labour market rigidities. It shows nominal wage rigidity to have little effect on the welfare loss from labour adjustment costs under a labour supply shock. This implies that the second best effect of nominal price stickiness under real wage persistence studied in Duval and Vogel (2007) does not apply to the propagation of supply shocks under nominal wage rigidity and labour adjustment costs.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11798.

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Date of creation: Nov 2008
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Handle: RePEc:pra:mprapa:11798

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-12-07 (All new papers)
NEP-CBA-2008-12-07 (Central Banking)
NEP-LAB-2008-12-07 (Labour Economics)
NEP-MAC-2008-12-07 (Macroeconomics)

References listed on IDEAS
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Matthew B. Canzoneri & Robert E. Cumby & Behzad T. Diba, 2004. "The Cost of Nominal Inertia in NNS Models," NBER Working Papers 10889, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Wolfgang Lechthaler & Dennis Snower, 2008. "Quadratic Labor Adjustment Costs and the New-Keynesian Model," Kiel Working Papers 1453, Kiel Institute for the World Economy. [Downloadable!]
Raf Wouters & Frank Smets, 2005. "Comparing shocks and frictions in US and euro area business cycles: a Bayesian DSGE Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 161-183. [Downloadable!]
Other versions:
- Frank Smets & Raf Wouters, 2004. "Comparing shocks and frictions in US and euro area business cycles: a Bayesian DSGE approach," Research series 200410-1, National Bank of Belgium. [Downloadable!]
- Frank Smets & Raf Wouters, 2004. "Comparing shocks and frictions in US and euro area business cycles - a Bayesian DSGE approach," Working Paper Series 391, European Central Bank. [Downloadable!]
- Smets, Frank & Wouters, Rafael, 2004. "Comparing Shocks and Frictions in US and Euro Area Business Cycles: A Bayesian DSGE Approach," CEPR Discussion Papers 4750, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Robert E. Hall, 2004. "Measuring Factor Adjustment Costs," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 899-927, August. [Downloadable!] (restricted)
Jean-Guillaume Sahuc & Frank Smets, 2008. "Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2-3), pages 505-521, 03. [Downloadable!] (restricted)
Other versions:
- Smets, F. & Sahuc, J-G., 2007. "Differences in Interest Rate Policy at the ECB and the Fed: An Investigation with a Medium-Scale DSGE Model," Documents de Travail 182, Banque de France. [Downloadable!]
Guido Ascari & Christian Merkl, 2007. "Real Wage Rigidities and the Cost of Disinflations," IZA Discussion Papers 3049, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Guido Ascari & Christian Merkl, 2007. "Real Wage Rigidities and the Cost of Disinflations," Kiel Working Papers 1312, Kiel Institute for the World Economy. [Downloadable!]
- Guido Ascari & Christian Merkl, 2009. "Real Wage Rigidities and the Cost of Disinflations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(2-3), pages 417-435, 03. [Downloadable!] (restricted)
Duval, Romain & Vogel, Lukas, 2007. "How do nominal and real rigidities interact? A tale of the second best," MPRA Paper 7282, University Library of Munich, Germany. [Downloadable!]
Olivier Blanchard & Jordi Galí, 2007. "Real Wage Rigidities and the New Keynesian Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(s1), pages 35-65, 02. [Downloadable!] (restricted)
Other versions:
- Olivier Blanchard & Jordi Galí, 2005. "Real Wage Rigidities and the New Keynesian Model," Economics Working Papers 912, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2005. [Downloadable!]
- Olivier Blanchard & Jordi Galí, 2005. "Real wage rigidities and the New Keynesian model," Working Papers 05-14, Federal Reserve Bank of Boston. [Downloadable!]
- Blanchard, Olivier J & Galí, Jordi, 2005. "Real Wage Rigidities and the New Keynesian Model," CEPR Discussion Papers 5375, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Olivier Blanchard & Jordi Gali, 2005. "Real Wage Rigidities and the New Keynesian Model," NBER Working Papers 11806, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Olivier J. Blanchard & Jordi Galí, 2005. "Real wage rigidities and the New Keynesian model," Proceedings, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]

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