Labor Market Search, Inflation and Emloyment Dynamics
AbstractThis paper tries to assess which kind of real rigidities can enhance our understanding of inflation and labor market dynamics in a dynamic general equilibrium model with capital and labor market frictions and nominal price rigidities. We particularly introduce real wage rigidities through non-separable preferences as suggested by ChÃ©ron and Langot (2004). This aims to obtain weaker procyclical real wage in the lines of recent literature. We show that the real rigidities, namely habit formation in consumption and capital adjustment cost improve our understanding of inflation dynamics and persistent real effects of monetary shocks. In addition, we investigate the effects of positive technology shocks on the labor market dynamics.
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2006 with number 415.
Date of creation: 04 Jul 2006
Date of revision:
labor market; new keynesian model; search and matching;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
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