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Inflation and labor market dynamics revisited

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  • Sveen, Tommy
  • Weinke, Lutz

Abstract

We demonstrate that the presence of an empirically plausible labor adjustment decision at the firm level rationalizes strategic complementarities in price-setting which help explain inflation dynamics. Those strategic complementarities are typically assumed away in the related existing literature. This motivates our revisiting of inflation and labor market dynamics.

Suggested Citation

  • Sveen, Tommy & Weinke, Lutz, 2009. "Inflation and labor market dynamics revisited," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1096-1100, November.
  • Handle: RePEc:eee:moneco:v:56:y:2009:i:8:p:1096-1100
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    References listed on IDEAS

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    Cited by:

    1. repec:wly:japmet:v:31:y:2016:i:7:p:1197-1214 is not listed on IDEAS
    2. Francesco Furlanetto & Nicolas Groshenny, 2012. "Matching efficiency and business cycle fluctuations," Working Paper 2012/07, Norges Bank.
    3. Francesco Furlanetto & Nicolas Groshenny, 2016. "Mismatch Shocks and Unemployment During the Great Recession," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(7), pages 1197-1214, November.
    4. Kurozumi, Takushi & Van Zandweghe, Willem, 2010. "Labor market search, the Taylor principle, and indeterminacy," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 851-858, October.
    5. P. Clerc, 2015. "Credible Wage Bargaining and the Joint Dynamics of Unemployment and Inflation," Working papers 568, Banque de France.
    6. Nicolas Groshenny, 2009. "Evaluating a monetary business cycle model with unemployment for the euro area," Reserve Bank of New Zealand Discussion Paper Series DP2009/08, Reserve Bank of New Zealand.
    7. Christiano, Lawrence & Trabandt, Mathias & Walentin, Karl, 2010. "Involuntary unemployment and the business cycle," Working Paper Series 1202, European Central Bank.
    8. Christiano, Lawrence J. & Trabandt, Mathias & Walentin, Karl, 2010. "DSGE Models for Monetary Policy Analysis," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 7, pages 285-367 Elsevier.
    9. Casares, Miguel, 2013. "On firm-level, industry-level, and aggregate employment fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2963-2978.
    10. Kurozumi, Takushi & Van Zandweghe, Willem, 2012. "Learning about monetary policy rules when labor market search and matching frictions matter," Journal of Economic Dynamics and Control, Elsevier, vol. 36(4), pages 523-535.

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    Keywords

    Labor market Inflation dynamics;

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