Inflation and Unemployment in Competitive Search Equilibrium
Using a monetary search model, Rocheteau, Rupert and Wright (2007) show that the relationship between inflation and unemployment can be positive or negative depending on the primitives of the model. The key features are indivisible labor, nonseparable preferences and bargaining. Their results are derived only for a special case of the bargaining solution, take-it-or-leave-it offer by buyers. Instead of bargaining, this paper considers competitive search (price posting with directed search). I show that the results in Rocheteau, Rupert and Wright (2007) can be generalized in an environment where both buyers and sellers have nonseparable preferences. In addition, the relationship between inflation and unemployment is robust to allowing free entry by sellers, which cannot be studied in Rocheteau, Rupert and Wright (2007).
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- Guillaume Rocheteau & Randall Wright, 2003.
"Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium,"
PIER Working Paper Archive
03-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Guillaume Rocheteau & Randall Wright, 2005. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Econometrica, Econometric Society, vol. 73(1), pages 175-202, 01.
- Randall Wright & Guillame Rocheteau, 2003. "Money in Search Equilibrium, in Competitive Equilibrium, and in Competitive Search Equilibrium," Levine's Bibliography 666156000000000302, UCLA Department of Economics.
- Guillaume Rocheteau & Randall Wright, 2004. "Money in search equilibrium, in competitive equilibrium, and in competitive search equilibrium," Working Paper 0405, Federal Reserve Bank of Cleveland.
- Aleksander Berentsen & Guido Menzio & Randall Wright, 2008.
"Inflation and Unemployment in the Long Run,"
PIER Working Paper Archive
08-012, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Randall Wright & Guido Menzio & Aleksander Berentsen, 2008. "Inflation and Unemployment in the Long Run," 2008 Meeting Papers 34, Society for Economic Dynamics.
- Berentsen, Aleksander & Menzio, Guido & Wright, Randall D., 2009. "Inflation and unemployment in the long run," Kiel Working Papers 1501, Kiel Institute for the World Economy (IfW).
- Aleksander Berentsen & Guido Menzio & Randall Wright, 2009. "Inflation and unemployment in the long run," IEW - Working Papers 442, Institute for Empirical Research in Economics - University of Zurich.
- Aleksander Berentsen & Guido Menzio & Randall Wright, 2008. "Inflation and Unemployment in the Long Run," NBER Working Papers 13924, National Bureau of Economic Research, Inc.
- Rocheteau, Guillaume & Rupert, Peter & Shell, Karl & Wright, Randall, 2008. "General equilibrium with nonconvexities and money," Journal of Economic Theory, Elsevier, vol. 142(1), pages 294-317, September.
- Moen, Espen R, 1997.
"Competitive Search Equilibrium,"
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University of Chicago Press, vol. 105(2), pages 385-411, April.
- Mei Dong, 2010. "Inflation And Variety," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 401-420, 05.
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