Labor Market Frictions into Staggered Wage Contracts
This paper proposes a generalization of the Calvo wage-setting equation, which embeds labor market frictions in the form of a Nash wage bargain. Adding labor market frictions changes significantly the dynamics of the standard wage-setting equation, such that it may have non-trivial implications for the design of optimal monetary policy, and could improve the ability of a general equilibrium model to replicate important labor market stylized facts.
Volume (Year): 5 (2006)
Issue (Month): 13 ()
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- Robert E. Hall, 2006.
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