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Labor Market Search, Inflation and Emloyment Dynamics

Author

Listed:
  • Günes Kamber

    () (Economics CES, University of Paris 1)

  • Chahnez Boudaya

    (University of Paris 1)

Abstract

This 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 Chéron 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.

Suggested Citation

  • Günes Kamber & Chahnez Boudaya, 2006. "Labor Market Search, Inflation and Emloyment Dynamics," Computing in Economics and Finance 2006 415, Society for Computational Economics.
  • Handle: RePEc:sce:scecfa:415
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    More about this item

    Keywords

    labor market; new keynesian model; search and matching;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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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