蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment
蝌蚪网 Journal: Macroeconomics
vol. 2,
no. 2, April 2010
(pp. 1–30)
Abstract
We construct a utility-based model of fluctuations with nominal rigidities and unemployment. We first show that under a standard utility specification, productivity shocks have no effect on unemployment in the constrained efficient allocation. That property is also shown to hold, despite labor market frictions, in the decentralized equilibrium under flexible prices and wages. Inefficient unemployment fluctuations arise when we introduce real-wage rigidities. As a result, in the presence of staggered price setting by firms, the central bank faces a trade-off between inflation and unemployment stabilization, which depends on labor market characteristics. We draw the implications for optimal monetary policy. (JEL E12, E24, E52)Citation
Blanchard, Olivier, and Jordi Gal铆. 2010. "Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment." 蝌蚪网 Journal: Macroeconomics 2 (2): 1–30. DOI: 10.1257/mac.2.2.1Additional Materials
JEL Classification
- E12 General Aggregative Models: Keynes; Keynesian; Post-Keynesian
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- E52 Monetary Policy