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Interacting nominal and real labour market rigidities

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  • Vogel, Lukas

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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File URL: http://mpra.ub.uni-muenchen.de/11798/
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File URL: http://mpra.ub.uni-muenchen.de/24513/
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Bibliographic Info

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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Keywords: Labour adjustment costs; wage stickiness; rigidity interaction;

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  1. 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, Blackwell Publishing, vol. 40(2-3), pages 505-521, 03.
  2. Olivier Blanchard & Jordi Galí, 2007. "Real Wage Rigidities and the New Keynesian Model," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 39(s1), pages 35-65, 02.
  3. Smets, Frank & Wouters, Raf, 2007. "Shocks and frictions in US business cycles: a Bayesian DSGE approach," Working Paper Series, European Central Bank 0722, European Central Bank.
  4. Smets, Frank & Wouters, Raf, 2004. "Comparing shocks and frictions in US and euro area business cycles: a Bayesian DSGE approach," Working Paper Series, European Central Bank 0391, European Central Bank.
  5. Guido Ascari & Christian Merkl, 2007. "Real Wage Rigidities and the Cost of Disinflations," Kiel Working Papers 1312, Kiel Institute for the World Economy.
  6. 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.
  7. Noah Williams & Andrew Levin & Alexei Onatski, 2005. "Monetary Policy under Uncertainty in Micro-Founded Macroeconometric Models," Computing in Economics and Finance 2005, Society for Computational Economics 478, Society for Computational Economics.
  8. Robert E. Hall, 2004. "Measuring Factor Adjustment Costs," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(3), pages 899-927, August.
  9. Matthew B. Canzoneri & Robert E. Cumby & Behzad T. Diba, 2007. "The Cost of Nominal Rigidity in NNS Models," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 39(7), pages 1563-1586, October.
  10. Marco Ratto & Werner Roeger & Jan in 't Veld, 2010. "Using a DSGE model to look at the recent boom-bust cycle in the US," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 397, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  11. Wolfgang Lechthaler & Dennis Snower, 2008. "Quadratic Labor Adjustment Costs and the New-Keynesian Model," Kiel Working Papers 1453, Kiel Institute for the World Economy.
  12. 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.
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